Posted on: 08th Feb, 2007 10:49 pm
my husband and i filed chapter 7 bankruptcy 1 year ago. we then filled out a deed in lieu and our mortgage company took possession of our home. i just received a 1099-a from the mortgage company. i am not sure if i need to claim this on my taxes. on the 1099-a on line 2 the balance of the property was $77,109.56 box 3 is empty and box 4 fair market value of property is blank. number 5 states was the borrower personally liable for repayment of debt and that says no. can you help?
Ross,
The lender has sent you Form 1099-A as you have gone for a deed-in-lieu and therefore has to report your income on account of forgiveness of debt. You need to fill up the form and submit it while filing your tax returns.
A standard 1099-A form as in http://www.irs.gov/pub/irs-pdf/f1099a.pdf has 5 boxes. There are some instructions regarding each box. You may go through it and in case you have any query, just get it clarified here.
The lender has sent you Form 1099-A as you have gone for a deed-in-lieu and therefore has to report your income on account of forgiveness of debt. You need to fill up the form and submit it while filing your tax returns.
A standard 1099-A form as in http://www.irs.gov/pub/irs-pdf/f1099a.pdf has 5 boxes. There are some instructions regarding each box. You may go through it and in case you have any query, just get it clarified here.
I went through IRS form Alex mentioned in his post. But I had difficulty understanding why the mortgage company filled Box No.5 as 'NO', if the mortgage was in your name then it should be 'YES', isn't it? And they should also fill the fair market value in Box No. 4, why they left it blank? You should ask the company about the reason why they did it like that.
Hi Ross,
In case of foreclosure, the fair market value is inserted in box 4, but for DIL, the appraised value of the property is shown.
In box 5, if the borrower is personally liable for repaying the loan then yes is entered otherwise a no is entered. For a mortgage a person is not personally liable to repay and the debt can only be recovered out of the collateral, i.e., the house. That is the reason the mortgage company entered no in that box 5.
Box 2 shows the total outstanding balance of the mortgage, only the outstanding principal amount is shown. This is the outstanding balance at the time property was taken over by them using the DIL.
Box 3 is not to be filled by you, and appears in grey shade, it is for gross foreclosure proceeds.
Why the mortgage company did not fill the appraised value of the property in box 4 is not clear and I also think you should have a talk with them.
Colin
In case of foreclosure, the fair market value is inserted in box 4, but for DIL, the appraised value of the property is shown.
In box 5, if the borrower is personally liable for repaying the loan then yes is entered otherwise a no is entered. For a mortgage a person is not personally liable to repay and the debt can only be recovered out of the collateral, i.e., the house. That is the reason the mortgage company entered no in that box 5.
Box 2 shows the total outstanding balance of the mortgage, only the outstanding principal amount is shown. This is the outstanding balance at the time property was taken over by them using the DIL.
Box 3 is not to be filled by you, and appears in grey shade, it is for gross foreclosure proceeds.
Why the mortgage company did not fill the appraised value of the property in box 4 is not clear and I also think you should have a talk with them.
Colin
We filed bankruptcy and it was final in January of 2008. Our primary residence was included in the bankruptcy (chapter 7) and we vacated that residence in April of 2008. We have received a 1099-A with a principal outstanding balance of $233,000 - FMV of $242,221.71 and the box is checked yes that we are personally liable for the repayment of the debt. What do we need to claim on our 2008 tax return?
Hi,
When you file Chapter 7 bankruptcy and receive a discharge order, you are no longer personally liable for the debts you have included it in bankruptcy. I'm quite surprised as to why the box is checked "yes". bankruptcy releases your personal obligation towards the debt, but you do owe the debt as because the lien remains on the property till you pay it off entirely.
On your 2008 tax return, you can claim deductions on interest you've paid so far on the mortgage. If you'd like to continue paying the mortgage, you need to sign a reaffirmation agreement with the lender.
Take care
When you file Chapter 7 bankruptcy and receive a discharge order, you are no longer personally liable for the debts you have included it in bankruptcy. I'm quite surprised as to why the box is checked "yes". bankruptcy releases your personal obligation towards the debt, but you do owe the debt as because the lien remains on the property till you pay it off entirely.
On your 2008 tax return, you can claim deductions on interest you've paid so far on the mortgage. If you'd like to continue paying the mortgage, you need to sign a reaffirmation agreement with the lender.
Take care
Hello, I am trying to do my taxes and old home, which I lost to forclosure and bankruptcy in September of last year. My lender sent me the 1099-A form and marked that I was personally liable for the difference between line 2+3.
How am I liable for the repayment if I was discharged in bankruptcy and especially before they aquired it (roughly 2 months)
Any answers are greatly appreciated!
How am I liable for the repayment if I was discharged in bankruptcy and especially before they aquired it (roughly 2 months)
Any answers are greatly appreciated!
we just received a 1099 for acquisition or abandonment of secured property for a home we had in florida that we claimed under chapter 7 bankruptcy. our bankruptcy was discharged on 6/9/08. the balance of principal outstanding is 253,666.42 and fair marked value is 295,528.69. anyway, are we responsible for any of this and should we report on our 2009 taxes? the house is no were worth that and we did not abandon as it was foreclosed on.
Relative to previous posting. Wells Fargo also checked "YES" we are personally liable for repayment of the debt even though we have had several and I mean "SEVERAL" conversations with them stating we filed bankruptcy and even provided them with the information several times. We still received tons of baggering phone calls, etc.
Hi, I got a 1099-A form that states in box 2 $233,910 and box 4 $168,000(FMV) and box 6 (liable) NO. The house was included in bankruptcy ch 7 and has been discharged. What does this all mean? Do I file this form? Please help.
Hi randell,
Form 1099A is sent to borrowers for acquisition and abandonment of secured property. The lender sent you this form as they are required to report this to the IRS. If the property was sold at a price less than the outstanding balance on the mortgage, there will be a deficiency. Since you included the debt in bankruptcy and it has been discharged, you are not liable to pay any tax on this deficiency.
Form 1099A is sent to borrowers for acquisition and abandonment of secured property. The lender sent you this form as they are required to report this to the IRS. If the property was sold at a price less than the outstanding balance on the mortgage, there will be a deficiency. Since you included the debt in bankruptcy and it has been discharged, you are not liable to pay any tax on this deficiency.
To randell,
The fair market value of your property was less than the outstanding balance on the mortgage and a borrower is supposed to pay tax on this difference. But you can exclude this difference from your gross income as it has been discharged through Chapter 7. You are required to file a form 982 and send it along with your tax return.
The fair market value of your property was less than the outstanding balance on the mortgage and a borrower is supposed to pay tax on this difference. But you can exclude this difference from your gross income as it has been discharged through Chapter 7. You are required to file a form 982 and send it along with your tax return.
I went through bankruptcy and was discharged in 2008.
2009 I am receiving 1099-a forms were the debt say 100 versus fair market value of 120 is less.
1) Since I did the taxes in 2008 what do I do with this?
2) Since the difference shows the banks made a profit how or who do I work with on this?
2009 I am receiving 1099-a forms were the debt say 100 versus fair market value of 120 is less.
1) Since I did the taxes in 2008 what do I do with this?
2) Since the difference shows the banks made a profit how or who do I work with on this?
Hi help,
The 1099A form is sent to you for imformational purpose as the lender is required to report it to both you and the IRS. However, if the fair market value of the property was more than what you owed, you do not have any income from the discharge of debts and thus, you owe no taxes. Hence, you do not have to report it to the IRS. Moreover, since your debt has been discharged through bankruptcy, you do not have to pay off the deficiency to the lender, nor do you have to pay any tax on the discharged debt.
The 1099A form is sent to you for imformational purpose as the lender is required to report it to both you and the IRS. However, if the fair market value of the property was more than what you owed, you do not have any income from the discharge of debts and thus, you owe no taxes. Hence, you do not have to report it to the IRS. Moreover, since your debt has been discharged through bankruptcy, you do not have to pay off the deficiency to the lender, nor do you have to pay any tax on the discharged debt.
My daughter and I both owned a house. We both filed bankruptsy and was disc. 2008. Both received 1099a, 227/279 and box checked yes. Irs told my daughter they did not have a record of her discharge so she sent all this. Question: Do we owe? Should we send paper or can we e file? Should we send copy of bank. discharge with them listed as creditor discharged? Would her husband be responsible for anything and should he list as injured spouse?
Hi jan,
If your debts have been discharged through bankruptcy, you do not have any income from the discharge of indebtedness and hence, you do not owe any tax to the IRS. If the IRS does not have a record of the bankruptcy discharge, send them the papers related to the bankruptcy. Your daughter's husband should not be responsible for anything related to the discharged debts. In this situation, I think he does not have to list as an injured spouse because your daughter does have any tax liability on the debts discharged.
If your debts have been discharged through bankruptcy, you do not have any income from the discharge of indebtedness and hence, you do not owe any tax to the IRS. If the IRS does not have a record of the bankruptcy discharge, send them the papers related to the bankruptcy. Your daughter's husband should not be responsible for anything related to the discharged debts. In this situation, I think he does not have to list as an injured spouse because your daughter does have any tax liability on the debts discharged.