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Ed Johnson
Ed Johnson, Tax Preparer
Category: Tax
Satisfied Customers: 10760
Experience:  GPHR Cert; U.S. Treasury Tax Advocacy Panel appointee
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I signed a deed in lieu. I see on my credit report ...

Customer Question

I signed a deed in lieu. I see on my credit report then entire amount of the construction loan but the actual amount of the loan when I signed the deed in lieu was only a fraction of the loan amount contracted for. (the builder took some draws but did not complete the home) Will I get a 1099 for the entire amount or just the amount that the bank suffered as a loss?
Submitted: 8 years ago.
Category: Tax
Expert:  Ed Johnson replied 8 years ago.

Dear EK,

Thank you for your question. I am using your initials because this is a public environment and I wish to protect your identity.

A deed in lieu is often treated as abandoned. So you would get a 1099-A and you could also get a 1099-C.

If there was no forgiveness of debt, then there will not be a 1099-C, but you would get a 1099-A.

Depending on the outcome, you could also have a capital gain on this property.


Ed Johnson and other Tax Specialists are ready to help you
Customer: replied 8 years ago.
Reply to Ed Johnson's Post: a 1099-a is a new form for 2008 and I am not sure where it will be entered on the 1040. I will learn that later, my big question is will the amount on that 1099-a be the entire amount of the contracted construction loan $300,000)or the amount that was on the loan when the deed in lieu was signed ($20,000.00) the latter being the amount of the bank loss?
Expert:  Ed Johnson replied 8 years ago.

The Dear Etta,

Actually the 1099-A has been around for a while:

None the less: it may be new to you.

In block two the lender will list the remaining balance of the loan when the property was abandoned.

In block 4, they will list the FMV. FMV is either the sale price at auction or open market sale, or the in your case, the deed in lieu, they should list it as the same as the mortgage value.



Customer: replied 8 years ago.
Thank you so much, have a good day!
Expert:  Ed Johnson replied 8 years ago.

Dear EK,

You are welcome, thanks for you comments and feedback. Best of luck to you.