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I lost my home in a foreclosure during 2009. The lending agency

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I lost my home in...
I lost my home in a foreclosure during 2009. The lending agency sent me a copy of the 1099-A they supplied to the IRS. The balance of principal outstanding was less then the fair market value. What does this mean to me, as the tax payer?
Submitted: 7 years ago.Category: Tax
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Answered in 23 minutes by:
3/1/2010
Tax Professional: RD, Certified Public Accountant (CPA) replied 7 years ago
RD
RD, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 8,784
Experience: CPA, MBA, Over 10 yrs of experience in tax planning and business consulting..
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The 1099-A is basically treated as a "sale of home" for the lower of FMV or amount of loan.

You will report the disposal of the home on your personal tax return. The disposal will be reported at the fair market value if you received the difference between the fair market value and the balance due on the loan. Else you will report the disposal at the loan amount due.

 

Let me know if you have any question.

 

Please note: This advice is provided with the understanding that all the relevant facts have been provided by you. Any change in facts might affect the advice given and hence may not be relied on in such cases. Nothing contained in this reply was intended or written to be used, can be used by any taxpayer, or may be relied upon or used by any taxpayer for the purposes of avoiding penalties that may be imposed on the taxpayer under the Internal Revenue Code of 1986, as amended.

 

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Customer reply replied 7 years ago
I have received nothing from the lending agency besides disappointment! Am I still liable to them for the outstanding balance even though they have not contacted me since the foreclosure auction in August, 2009?
Tax Professional: RD, Certified Public Accountant (CPA) replied 7 years ago

IF the fair market value was more than the loan balance outstanding than you are not liable for the outstanding balance. They must have satisfied the loan balance due with the proceeds from sale of property.

 

 

Let me know if you have any question.

 

Please note: This advice is provided with the understanding that all the relevant facts have been provided by you. Any change in facts might affect the advice given and hence may not be relied on in such cases. Nothing contained in this reply was intended or written to be used, can be used by any taxpayer, or may be relied upon or used by any taxpayer for the purposes of avoiding penalties that may be imposed on the taxpayer under the Internal Revenue Code of 1986, as amended.

 

RD
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