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House foreclosed on How do I file ,forms etc

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house foreclosed on How...
house foreclosed on How do I file ,forms etc
Submitted: 2 years ago.Category: Tax
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1/16/2016
Tax Professional: Lev, Tax Advisor replied 2 years ago
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 33,364
Experience: Taxes, Immigration, Labor Relations
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We need to know some additional information before proceed with filing...

- was that your primary residence?

- was any outstanding mortgage balance forgiven or written off at foreclose?

- did you receive form 1099S or 1099A or 1099C regarding that transaction?

- any additional circumstances?

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Customer reply replied 2 years ago
we moved out a year before the foreclosed
we have not received any forms
we do not know about forgiven, they took possision of the house
Tax Professional: Lev, Tax Advisor replied 2 years ago

If that was your primary home - at least two out of last five years before disposition - that is classified as your primary home for tax purposes.

If that correct - then no gain is recognized for tax purposes.

Regarding your tax reporting - that is mainly depends on what forms you will receive - so I suggest to wait before you start preparing your tax return. You may expect all forms to be sent out by the end of the month of January.

Most likely - you will receive form 1099C reporting the amount of debt forgiven - and there will be some special reporting required while that amount is excluded from your taxable income if that was your primary residence.

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Tax Professional: Lev, Tax Advisor replied 2 years ago

If the property was disposed or foreclosed - it is treated as the sale for its FMV.
So line 7 on the form 1099C reports the fair market value of property - that amount is treated as the selling price.
Then - you will need to use form 982 with your tax return to exclude the amount of forgiven debt - otherwise the IRS will treat that amount from line 2 as taxable income.

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Tax Professional: Lev, Tax Advisor replied 2 years ago

Here is the form
http://www.irs.gov/pub/irs-pdf/f982.pdf
You will check box 1e - for the primary residence.
on line 2 list the full forgiven amount (from 1099C box 2)
then
line 10b - forgiven debt related to the principal residence
That all you do to exclude from taxable income.
The sale of your principal residence is generally not reported.
But you will need all forms - when you will get them - be sure to come back and I will help you with filing.

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