Tax Break for Mortgage Debt Forgiveness

I recived 1099-c for property wich was close as ded off lieu.Bank send me 1099-C amount witch never egsist.Pay tax on diference I understend but not on amount wich iz for 1/3 higer from orginal purchesing price.org price 115,ooo down payment 17,ooo and loan start with 97,5oo,oo. balance of loan is 89,123,00, fvm is 33,000 and my 1099-c box 2 ask for thet amount.

Hi Guest,

The deficient amount resulting from the deed in lieu is the difference between the amount owed to the mortgage lender and the sale price of the property. However, depending upon the Mortgage Dent Relief Act, you won't be liable for paying off any taxes on the deficient balance.

Thanks

anyone have any information on whether there is a similar act for debt forgiveness in New York, for state taxes?

Welcome mike,

The Mortgage Debt Forgiveness Act is valid in all the states till 2012. You can contact a tax advisor based at New York and he will further guide you in this regard.

we have been approved for this :) my question is this....we bought the house for two hundred seventy five thousand. 10 yr intrest only, house is valued at two hundred three thousand and we still owe the 275. So I'm thinking we won't have to pay anything on unearned income?

welcome leona,

in case of a deed in lieu of foreclosure, the lender won't come after you in order to recover the deficient balance resulting from the sale of the property. as far as the forgiven debts are concerned, you won't have to pay the taxes depending upon the mortgage debt relief act.