Posted on: 14th Apr, 2010 04:48 pm
What are the 2010 tax ramifications of deed in leiu of foreclosure?
hi peggy,
if you do a deed in lieu of foreclosure on your property, your lender is likely to forgive the deficiency. if it is forgiven, it will be considered as your taxable income. you will have to report this income to the irs. but as per the mortgage forgiveness debt relief act, you can claim exemption from paying taxes on this canceled debt amount from the deed in lieu, if you have used the property as your primary residence.
if you do a deed in lieu of foreclosure on your property, your lender is likely to forgive the deficiency. if it is forgiven, it will be considered as your taxable income. you will have to report this income to the irs. but as per the mortgage forgiveness debt relief act, you can claim exemption from paying taxes on this canceled debt amount from the deed in lieu, if you have used the property as your primary residence.