Form 1099a: How to file taxes after the foreclosure sale

As the fair market value of the property exceeds your principal balance, I think it will be reported as your gain on the form 1099-A. You haven't received the 1099-c form because the lender has not forgiven any debt in your case.

What does it mean that the lender has not forgiven the loan? Will I eventually have to pay something since they have not forgiven the loan? A

Hi Brenda!

Welcome to forums!

If your property is sold by the lender in a short sale or due to foreclosure, the lender will have the right to sue you for the deficient amount. This deficient amount in case of short sale and foreclosure is not forgiven. So you will be liable to pay that deficient amount to the lender. So, you will receive only form 1099a (for acquisition or abandonment of the property).

Feel free to ask if you have further queries.

Sussane

I received a form 1099a ..bal of principal outstanding is 199200.00 the fmv is 105287.00.....what does this mean

Thanks Sussane. I do have other questions....
1.) I google my old address, it is currently on the market for 109,000. So if I understand correctly as long as the sell the home I could be liable for the remaining amount of the FMV?

2.) How will the gain impact my tax return for 2008?

3.) I've heard of banks paying the difference of the balance and fmv, does this occur in IL, should I have received something?

I appreciate your assistance.

Hi Brenda,

Yes, you will be liable for the deficient amount resulting from the sale of the property if you are going for a short sale. As you will be paying the deficient amount, you will not be charged any taxes on this. You can negotiate with the bank about forgiving the deficient amount but it will be totally the lender's discretion whether he will forgive it or not.

Thanks,

Jerry

i filed bankruptcy and surrendered my home. i received a form 1099a and the fmv is higher than the balance. curiously, i had a 1st and 2nd mortgage on this home with the very same company that sent me the 1099-a, however, they did not add both balances together for the total balance outstanding, only the balance of the first mortgage. if they would have added both, then the fmv would be lower than the balance outstanding. it also states i am liable for repayment of the debt, but i did not receive a 1099-c due to my filing bankruptcy. the way it stands right now, i have a "gain" of about $6,000 due to the fmv being higher. has this happened to anyone else? if so, did the mortgage company follow later with a "corrected" 1099-a? i don't want to go through filing my taxes and then having to redo stuff because the mortgage company forgot about the other debt!

hi just b,

i think you should contact your lender and clear off the whole issue. in my opinion, they should add the balance of the second mortgage as well. as far as 1099-c is concerned, you will not receive it because it is issued only if your debts are forgiven by the lender. in your case, the lender has not forgiven the debts rather you are liable to pay them off.

thanks,

jerry

we forclosed in 2008 and it was in a 'non-recourse state' MN. We also got a form 1099-A. The 982 form is a new form that forgives debt. Our balance is 139,900. The FMV is 106,000. Since we forclosed in a non-recourse state, do we have to pay taxes on this difference?

Hi anne

As far as I know, deficiency judgments are allowed in Minnesota. If the lender forgives the deficient amount, then I think you will have to pay taxes on the forgiven amount.

Thanks

We were discharged of a chapter 7 bankrupcty in March 2008. We included our home mortgage in the bankruptcy. I am waiting to receive a form 1099a from my mortgage company. (They mailed it to the wrong address.) I do know that the fair market value of the home was less than what I owed on it. How will this affect my tax return since it was discharged in the bankruptcy?

Hi Brandi,

Did you reaffirm the mortgage and decided to pay the mortgage dues? If yes, then I don't think you will liable to pay any kind of taxes. Moreover if you haven't reaffirmed the debts, still you won't be required to pay the taxes as you will not be personally liable to pay off the mortgage dues.

Thanks.

1099 a on a second mortgage what to i do with on my 2008 return i still in house and the second mortgage is still behind and i received a 1099a

Form 1099 a is issued in case of an acquisition or abandonment of property. Did you apply for a loan modification with the lender due to your late payments? I would suggest you speak to your lender as to why he issued a 1099a.

The first home lost to forclosed and got a 1099a $295,050.00 and the fmv $314,786.00. The 2nd home was sold in a shor sell and got a 1099c debt canceled $71,519.75 and the fmv is $340,000.00. So what should I do? Will I have to pay tax on the 1099. I live in MN. Thanks!