Posted on: 27th Jan, 2010 07:52 pm
my husband and were received a bankruptcy discharge September 2008, which included a home loan. They foreclosed on us the following year, per our attorney this is "normal" becuase even though we had no mortgage any longer due to the bankruptcy, they still need to foreclose to take the property back. It was foreclosed on September 2009 and now, Jan 2010 we have received a 1099-A form stating that the balence was 84,516 and the FMV was 50,000 and box #5 states "yes" we are are liable for the repayment of the debt. What does this mean? is this an error? I thought the bankruptcy cleared it all away. How does this affect how I need to do my taxes this year? HELP!!!
Hi Rachelle,
What your attorney said is right. Since the mortgage has been discharged through bankruptcy, you are not responsible for it any longer. However, the lender still needs to foreclose the property to satisfy the mortgage lien. If the sales price of the house does not satisfy the mortgage lien, there will be a deficiency. But as you have been discharged from bankruptcy, you do not have to pay it off. You will also not be required to pay any taxes on this discharged debt. The lender sent you the 1099A form because they are required to report the deficiency to you as well as to the IRS.
What your attorney said is right. Since the mortgage has been discharged through bankruptcy, you are not responsible for it any longer. However, the lender still needs to foreclose the property to satisfy the mortgage lien. If the sales price of the house does not satisfy the mortgage lien, there will be a deficiency. But as you have been discharged from bankruptcy, you do not have to pay it off. You will also not be required to pay any taxes on this discharged debt. The lender sent you the 1099A form because they are required to report the deficiency to you as well as to the IRS.
Thank you for your quick response. However I do have an additional questions after your response, does the 1099-A form affect how I should do my taxes this year? IE: should I go to a CPA (or equivalent) to get my taxes done rather than using TurboTax as I normally do? Do I need to "address" the 1099-A form on my taxes or is it for informational purposes only?
I have the same question having received a 1099A and not knowing if I need to report it, but also wonder if I actually suffered a loss on the involuntary conversion; in other words I owed less than I actually had invested into my home, do I get to claim a loss on the sale?
Thank you!
Thank you!
Hi Rachelle,
You need to report the forgiven debt amount on your taxes. It is not for informational purposes only. Even though you will not owe any taxes on this forgiven debt, it has to be reported to the IRS. You need to fill out form 982 and attach it to your tax return. If your property was foreclosed and you need to report only the forgiven debt, you do not have to fill out the entire 982 form. You can just fill out lines 1e and 2. If you need a form 982, you can download it from the IRS website at http://www.irs.gov/pub/irs-pdf/f982.pdf .
Hi Debsue,
If you have received a 1099A form, you will have to report the forgiven debt to the IRS through form 982. You may have owed less than what you had invested in the home when you bought it. But how much did you sell the property for? Was the sale price more than what you owed on the property? If it was, then you made a profit from the sale of the home. But if the home was foreclosed or short sold and the sale price was not enough to pay off the mortgage, it will be considered as your lendeloss. If he forgives the mortgage balance, it will be considered as your taxable income which you need to report to the IRS.
Thanks,
Jerry
You need to report the forgiven debt amount on your taxes. It is not for informational purposes only. Even though you will not owe any taxes on this forgiven debt, it has to be reported to the IRS. You need to fill out form 982 and attach it to your tax return. If your property was foreclosed and you need to report only the forgiven debt, you do not have to fill out the entire 982 form. You can just fill out lines 1e and 2. If you need a form 982, you can download it from the IRS website at http://www.irs.gov/pub/irs-pdf/f982.pdf .
Hi Debsue,
If you have received a 1099A form, you will have to report the forgiven debt to the IRS through form 982. You may have owed less than what you had invested in the home when you bought it. But how much did you sell the property for? Was the sale price more than what you owed on the property? If it was, then you made a profit from the sale of the home. But if the home was foreclosed or short sold and the sale price was not enough to pay off the mortgage, it will be considered as your lendeloss. If he forgives the mortgage balance, it will be considered as your taxable income which you need to report to the IRS.
Thanks,
Jerry
I have recieved a 1099-A from a previous lender. I worked with this lender for a year and gave the house back to them in lue of forclosure. They excepted and sold the house after everything was completed for less than I owed. They sent me a letter disolving me of all debt. Do I have to claim this difference in what they sold it for compared to what I owed as income this year ??
Hi Mr G,
If your property was sold for less than what you owed and your lender has sent you a 1099A form for the deficiency, you will have to report it to the IRS. However, the 1099A form does not suggest that the lender has forgiven the debt. He can still come after you to collect the deficient amount. The 1099A form simply means that the lender acquired your property and was unable to recover the mortgage in full by selling the house. If the lender cancels this deficient amount, he will send you a 1099C form and if you receive that, you will be subject to pay taxes on the cancelled debt amount.
If your property was sold for less than what you owed and your lender has sent you a 1099A form for the deficiency, you will have to report it to the IRS. However, the 1099A form does not suggest that the lender has forgiven the debt. He can still come after you to collect the deficient amount. The 1099A form simply means that the lender acquired your property and was unable to recover the mortgage in full by selling the house. If the lender cancels this deficient amount, he will send you a 1099C form and if you receive that, you will be subject to pay taxes on the cancelled debt amount.
Forgive me... even after reading all the postings. What lines do I fill out on form 982 and what do I put in for response.
To bucko,
If you received a 1099A form from your lender and the outstanding principal balance was more than the fair market value, you will have to report the difference as your income. You do not have to pay tax on this discharged debt under the Mortgage Forgiveness Debt Relief Act, 2007, provided you used the property as your primary residence. If you are claiming the exclusion from taxes because you used the property as your principal residence, you need to fill out lines 1e and 2 on the form 982. You do not have to fill out the entire form.
If you received a 1099A form from your lender and the outstanding principal balance was more than the fair market value, you will have to report the difference as your income. You do not have to pay tax on this discharged debt under the Mortgage Forgiveness Debt Relief Act, 2007, provided you used the property as your primary residence. If you are claiming the exclusion from taxes because you used the property as your principal residence, you need to fill out lines 1e and 2 on the form 982. You do not have to fill out the entire form.
Form 1009-a for 2009
Box 2 192,000
Box 3 209,000
Box 5 is marked YES
What does this have in detail for taxes, I have no idea on how to read this form ?
Please HELP !!
Box 2 192,000
Box 3 209,000
Box 5 is marked YES
What does this have in detail for taxes, I have no idea on how to read this form ?
Please HELP !!
Hi Jack,
If you defaulted on your mortgage and your lender foreclosed on your property, he will send you a 1099-A form. The box number 2 on this form shows the principal balance owed on the mortgage. The box number 3 shows the amount of interest owed on the loan. What amount does the box number 4 show?
The box 4 shows the fair market value of the property. If the amount listed in box 4 is less than the amount listed in box 2, you will owe the difference. The box 5 states that you are personally liable to repay the difference.
If the lender cancels this difference, you will owe taxes on this cancelled debt. You will be required to report this to the IRS. However, if you used the property as your primary residence, you can avoid paying taxes on this cancelled debt amount. You will have to file a form 982 to claim the exemption from taxes under the Mortgage Forgiveness Debt Relief Act, 2007.
Thanks,
Jerry
If you defaulted on your mortgage and your lender foreclosed on your property, he will send you a 1099-A form. The box number 2 on this form shows the principal balance owed on the mortgage. The box number 3 shows the amount of interest owed on the loan. What amount does the box number 4 show?
The box 4 shows the fair market value of the property. If the amount listed in box 4 is less than the amount listed in box 2, you will owe the difference. The box 5 states that you are personally liable to repay the difference.
If the lender cancels this difference, you will owe taxes on this cancelled debt. You will be required to report this to the IRS. However, if you used the property as your primary residence, you can avoid paying taxes on this cancelled debt amount. You will have to file a form 982 to claim the exemption from taxes under the Mortgage Forgiveness Debt Relief Act, 2007.
Thanks,
Jerry
Hi I foreclosured on my home in Ca. that I lived in for less than 2 years. I was in an auto accident 2 weeks after signing escrow which was financially devastating. I received a 1099a. Box 2 says $334,464.71. Box 4 says $367,257.03. So would seem I don't owe but I only lived there 1 1/2 years. I also had to file bankrupcty before the foreclosure. Will I owe taxes? I will be seeing a CPA, just not for 2 more weeks. Thanks!
Hi Laurie,
The box number 4 indicates the fair market value of the property, while the box number 2 shows the amount of money you owe. Since the fair market value of your property is more than the outstanding loan amount, you do not have any income from any cancelled debt. Therefore, you do not have to pay any tax for discharge of indebtedness.
The box number 4 indicates the fair market value of the property, while the box number 2 shows the amount of money you owe. Since the fair market value of your property is more than the outstanding loan amount, you do not have any income from any cancelled debt. Therefore, you do not have to pay any tax for discharge of indebtedness.
1099 a 2009 in fl
box 2:182,520.36
box 3: 100.00
box 5 yes
i read alot on this but no where have i seen fmv at 100.00 dollars i dont knwo what to do does a 982 form apply to me the house was my primary residence
box 2:182,520.36
box 3: 100.00
box 5 yes
i read alot on this but no where have i seen fmv at 100.00 dollars i dont knwo what to do does a 982 form apply to me the house was my primary residence
To tonester,
I've replied to your query at http://www.mortgagefit.com/budgeting-finance/1099a-fmv.html#156495 .
Hope it helps you. However, if you have further queries, feel free to ask the community.
I've replied to your query at http://www.mortgagefit.com/budgeting-finance/1099a-fmv.html#156495 .
Hope it helps you. However, if you have further queries, feel free to ask the community.
I am trying to help my Dad (of which is seperated and in financial dissaray) file his taxes. He received a 1099 A for the home he foreclosed in 2009. This home was their primary residence until the beginning of 2008. The mortgage was 59,800 and the FMV was 66,000. the lender auctioned the home for $17,000. He has not filed bancruptcy and we are working with his different lendors to avoid bankruptcy.
It appears as if he won't have to pay taxes on the 1099A 59,800 or the difference because the FMV is higher. Does he still need to record this on his taxes as income? Additionally, does he have to file this as a sale and compute capitol gains? I am feeling very confused and the more I read the more confusing it appears. Thank you for your assistance and any points in the right direction.
His wife just sent this to him last week and said that she just got it (yeah right!)
It appears as if he won't have to pay taxes on the 1099A 59,800 or the difference because the FMV is higher. Does he still need to record this on his taxes as income? Additionally, does he have to file this as a sale and compute capitol gains? I am feeling very confused and the more I read the more confusing it appears. Thank you for your assistance and any points in the right direction.
His wife just sent this to him last week and said that she just got it (yeah right!)