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How does the law work with a 1099c on a mortgage? we took a

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2nd on our primary residence...
how does the law work with a 1099c on a mortgage? we took a 2nd on our primary residence in 2007. but then had to rent out our home to go to another to another state to care of a sick parent. In 2014 we bought another house in that state and took the offer from the bank to pay off the 2nd at a lesser amount and got a 1099c for 79,000 more than we made for the year. my husband is 66 years old. we ended up with a bill to the IRS of 29,000. I read where you can have a one time expiation on a mortgage debit but I need to know if it applies to when you incurred the debit or paid it off? Because we did not live in the house when we paid it off but did when we got the loan.
Submitted: 2 years ago.Category: Tax
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Answered in 19 minutes by:
7/8/2015
Tax Professional: emc011075, Tax adviser replied 2 years ago
emc011075
emc011075, Tax adviser
Category: Tax
Satisfied Customers: 3,237
Experience: IRS licensed Enrolled Agent and tax instructor
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Hi. My name is ***** ***** I will be happy to help you.
What you are referring to is "The Mortgage Forgiveness Debt Relief Act", unfortunately this only apply to your principle residence, not rental property. It would have to be your principle residence when the debt was forgiven (when you received 1099C)
Cancellation of debt on rental property is a complex issue, the forgiven debt might have to be treated as income. I would strongly suggest to consult a tax professional about your best options. You might qualify for insolvency (your debt is more than your total assets - home, cars, retirement accounts...) or try offer in compromise if you have limited income.
Let me know if you have any questions.
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Customer reply replied 2 years ago
thank you
Tax Professional: emc011075, Tax adviser replied 2 years ago
You're welcome.
I know that's not the answer you were hoping for but believe me, if there were an easier way to do it and still to comply with IRS complex rules I would be happy to tell you that.
Is there anything else I can help you with today? And if this answered your question, please take a moment to rate my response so that I may receive credit for assisting you today. However, if you need clarification, or want to discuss this issue further, let me know. Thank you.
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emc011075
emc011075, Tax adviser
Category: Tax
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