How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask emc011075 Your Own Question
emc011075, Tax adviser
Category: Tax
Satisfied Customers: 2995
Experience:  IRS licensed Enrolled Agent and tax instructor
Type Your Tax Question Here...
emc011075 is online now
A new question is answered every 9 seconds

If your property goes into foreclosure, can you claim that

Customer Question

if your property goes into foreclosure, can you claim that loss on your federal taxes.
Submitted: 1 year ago.
Category: Tax
Expert:  emc011075 replied 1 year ago.

Hi. My name is ***** ***** I will be happy to help you.

It depends on what type of property is it. Is it your personal residence?

Expert:  emc011075 replied 1 year ago.

If bank foreclose on your main home, you may have a loss or gain, depending on your purchase price, major improvements you done, your mortgage and current fair market value of the property. While losses are not deductible, gain is usually taxable. You will receive 1099A from the bank to help you to determine your gain or loss. If your mortgage is more than the fair market value of the property, bank usually cancel the outstanding debt and issue you 1099C. Currently the canceled debt is considered a taxable income to you.

If the foreclosed property is your business or rental property, the foreclosure is treated differently. The property is treated as sold and you claim gain/loss from disposition of business property. If bank cancel the outstanding debt, you can exclude it from the income.

Let me know if you have any questions.

Expert:  emc011075 replied 1 year ago.

I see you read my respond. Do you have any questions? 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.