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Old 03-02-2014, 04:21 PM
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1099-A for foreclosed property

I have a home that my daughter was renting that I had to let got through foreclosure this fall. I have received a form 1099-A on the property that lists the outstanding balance as $10,775.24 and the fair market value of the property as $11,410.80.

I have not received a form 1099-C for cancellation of debt.

I do not know how to report this on my taxes. If I use the worksheet in the IRS form, it looks like my gain or loss comes to $0. Is that right?

I am using TAXACT.com and want to finish this up. How do I report the info from this 1099-A?



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Old 03-02-2014, 06:13 PM
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Originally Posted by crisnbond View Post


#1;I have a home that my daughter was renting that I had to let got through foreclosure this fall. I have received a form 1099-A on the property that lists the outstanding balance as $10,775.24 and the fair market value of the property as $11,410.80.

I have not received a form 1099-C for cancellation of debt.

I do not know how to report this on my taxes. If I use the worksheet in the IRS form, it looks like my gain or loss comes to $0. Is that right?



#2;I am using TAXACT.com and want to finish this up. How do I report the info from this 1099-A?
#1; The information on Form 1099-A will likely be needed to report the foreclosure on your tax return. A foreclosure is treated as the sale of property, and you will need to calculate your gain /loss on the property. But unlike a normal sale, there's no selling price and this is where the Form 1099-A comes into play. You will need to report the foreclosure just like it were a sale of the property. And to properly report this, you'll need to know the selling date and selling price of the property. Form 1099-A provides you with the date of sale and the selling price of the property. Also, you need the purchase date and purchase price; and that information will be found in your escrow statements from when you bought it.

Figuring out the selling price of the property is a bit complicated. The answer depends on the type of loan. you will utilize either the fmv of the property or the outstanding loan balance on the property for the selling price. Both of these figures are reported on Form 1099-A. The outstanding loan balance is found in Box 2; the property's fmv is found in Box 4. The date of the foreclosure is indicated in Box 1, and this will be used as the date the property was disposed of as the sale date. you will also need to know if the loan was a recourse or a non-recourse loan; the loan was probably a recourse loan if the bank has checked yes in Box 5 .People might also receive Form 1099-C instead of Form 1099-A if the lender both foreclosed on the property and canceled any mortgage debt for which the borrower was personally liable.Gain or loss is reported on Sch D/8949 I guess for homes that were personal residences. As a reminder, the IRS does not allow people to claim a loss on personal residences. Any gain on personal residences can be offset by the capital gains exclusion for a main homeup to $500k for mfj as u know.
as the foreclosed property was your personal residence, the foreclosure will be reported on Sch D/8949. You'll use the date of the foreclosure ,found in box 1 of the 1099-A,as your date of sale. You'll need to indicate the selling price. This will be either the amount in box 2 or the amount in box 4. Which figure you'll use depends on the lending laws in the state where the property was located. You'll also need to indicate your purchase price /cost basis in the property or adj basis I guess. That information you should have in your records, usually from the HUD-1 closing statement from when you purchased the property. The difference between the selling price and your cost basis will result in your gain or loss. Gains are taxable, losses personal residences are not tax-deductible.

#2;I am using drakesoftware pro version so I m notfamuiliar with the software I guess you can get tech support from the vendor.



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