Posted on: 30th Jan, 2010 03:13 pm
My job moved from California to Virginia in Oct. 2006. I had to move with the job or be unemployed in a very bad job market. I had 90 days in which my company would pay per diem for my family to stay in a hotel until we found residence in Virginia. I took a loan on my property in Cali, in-order tp purchase a residence for my family in VA. For 2.5 years I had to make 2 mortgage payments or until we just could'nt do it anymore. Through over 2 years trying to sell and no luck with renters we tried to shortsale to no avail. Finally we foreclosed. Since this was not primary residence due to job move....can we be liable for the difference in market value and what we owed at the time of foreclosure.
Hi LEODANZY,
If your home in California was foreclosed and there was deficiency from the sale of the home, you will be liable for the deficiency. Your lender can either come after you for the deficiency or they can forgive this amount. The lender will send you for a 1099A form for the deficiency. But this does not mean the deficient amount is forgiven by the lender. If the deficiency is forgiven, the lender will send you a 1099C form and you will have to pay taxes on this amount. Since the property was not used as a primary residence, you cannot claim exemption from paying taxes on this forgiven debt amount.
If your home in California was foreclosed and there was deficiency from the sale of the home, you will be liable for the deficiency. Your lender can either come after you for the deficiency or they can forgive this amount. The lender will send you for a 1099A form for the deficiency. But this does not mean the deficient amount is forgiven by the lender. If the deficiency is forgiven, the lender will send you a 1099C form and you will have to pay taxes on this amount. Since the property was not used as a primary residence, you cannot claim exemption from paying taxes on this forgiven debt amount.
What if the home sells for more than was owed? Do mortgage companies ever send both, 1099A and 1099C?
Hi,
Form 1099A is sent to borrowers for abandonment and foreclosure of property. If the house sells for less than the amount owed and the lender cancels this deficiency, you'll be sent a 1099-C form. In case the house sells for more than the outstanding balance on the loan, there will not be any deficiency from the sale of the property. The lender will not send you a 1099-C form as there will be no discharge of debt.
Form 1099A is sent to borrowers for abandonment and foreclosure of property. If the house sells for less than the amount owed and the lender cancels this deficiency, you'll be sent a 1099-C form. In case the house sells for more than the outstanding balance on the loan, there will not be any deficiency from the sale of the property. The lender will not send you a 1099-C form as there will be no discharge of debt.