Posted on: 12th Feb, 2009 10:49 am
is deed in lieu of foreclosure subject to tax on amount of mortgage owed...we gave lender a deed in lieu of when our house wouldn't sell. we lost approx $100k because of 20% down and improve,ments, is uncle sam going to tax what we still owed?
Hi irishjeanie,
In case of a deed in lieu, the deficient amount resulting from the sale of the property is forgiven by the lender. But this forgiven amount is considered as an income by the tax department and thus taxes are charged on that forgiven amount.
Thanks
In case of a deed in lieu, the deficient amount resulting from the sale of the property is forgiven by the lender. But this forgiven amount is considered as an income by the tax department and thus taxes are charged on that forgiven amount.
Thanks
Hi irishjeanie,
It's true that the deficient amount forgiven by the lender is considered as income and is thus taxable. However, under the mortgage forgiveness debt relief act, 2007 this deficiency amount can be exempted from such taxes.
It's true that the deficient amount forgiven by the lender is considered as income and is thus taxable. However, under the mortgage forgiveness debt relief act, 2007 this deficiency amount can be exempted from such taxes.