Have a Tax Question? Ask a Tax Expert
Welcome! My goal is to do my very best to understand your situation and to provide a full and complete answer for you.
Good morning. Did you receive a 1099-C evidencing the forgiveness? Was this property you principal residence? Thanks.
Thanks. In that case, you have no tax liability to the IRS for the forgiveness. Normally, debt forgiveness results in taxableincome. But under the Mortgage Forgiveness Debt Relief Act of 2007, taxpayersmay exclude debt forgiven on their principal residence if the balance of theirloan was $2 million or less. The limitis $1 million for a married person filing a separate return. Details are onForm 982 and its instructions.
I hope thishas given you information that has been helpful to you. If the informationseems moregeneral than specific,please be aware that we are only allowed to provide information and notspecific advice. If youhave a follow-up question, please remember that there might be a delay betweenyour follow up questions and my answers because I may be helping others ortaking a break.
If you do have any additional questions about my answerplease simply ask a follow up question without rating so I can provideyou with a fully satisfactory answer. Please be aware that any rating of 1 or 2 isreflected as a negative rating, reflects negatively on my performance, and Ireceive no credit for my answers.
Thanks for allowing me to be of service to you. Please beaware that the information provided here is not legal advice. Rather it issimply general information. All states have intricacies in their laws and anyinformation given is simply information only and specifically is notintended to be, nor does it constitute, legaladvice. This communication does not establish an attorney-client relationshipwith you. I hope this answer has been helpful to you.