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I live in michigan, I gave my home back to the bank. I was

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told that I could be...
I live in michigan, I gave my home back to the bank. I was told that I could be liable to pay taxes on the difference between what I owed and what they sell the property for. I was also told that there was a program to get that waived if it was my primary residnce which it was. Can you tell me where I would get a hold of that information?
Submitted: 8 years ago.Category: Tax
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Answered in 1 minute by:
9/3/2009
Tax Professional: Merlo, Accountant replied 8 years ago
Merlo
Merlo, Accountant
Category: Tax
Satisfied Customers: 9,783
Experience: 25+ years tax consulting. Specializing in returns for US citizens living abroad
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HelloCustomer

Have you owned this home for at least 2 years and lived there for at least 2 of the last 5 years?

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Customer reply replied 8 years ago
Yes, we have owned the home since 2000 and lived in it until last month
Tax Professional: Merlo, Accountant replied 8 years ago
Hello againCustomer

As long as this was your primary residence, which it was as long as you meet the ownership and residency rules, then if you go through a short sale or foreclosure in the years 2007 thru 2011, the IRS is allowing you to exclude the amount of the cancelled debt from your taxable income.

This is part of the Mortgage Forgiveness Debt Relief Act, and you can read more about this at the following link:

http://www.irs.gov/individuals/article/0,,id=179414,00.html

When you file your tax return next year, you will file Form 982 with your return to claim this exclusion.

If this was helpful please press the Accept button. Positive feedback is also appreciated.

Thank youCustomer

Merlo
Merlo, Accountant
Category: Tax
Satisfied Customers: 9,783
Experience: 25+ years tax consulting. Specializing in returns for US citizens living abroad
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