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Old 01-12-2011, 01:53 AM
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How is a foreclosure of rental property treated?

I foreclosed on a rental property this year. What value do I use for the sale price? And it is correct that my original purchase price must remain the basis?



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Old 01-12-2011, 11:25 PM
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β€œ I foreclosed on a rental property this year. What value do I use for the sale price? β€œ----->For a foreclosure, execution, or similar sale, the FMV in box #4 on 1099-A is your sale price.
β€œAnd it is correct that my original purchase price must remain the basis?”----->Yes.; however, If there was a debt, mortgage loan, commercial loan, I guess, that you assumed, then you should include the debt as part of cost, basis. The loan was probably a recourse loan if the bank has checked yes in Box 5 which asks "Was borrower personally liable for repayment of the debt? Then your cost, basis, is what you paid for the property , original cost, plus the amount of debt you assumed in the purchase.
Please visit the IRS Website here on 1099-A; http://www.irs.gov/pub/irs-pdf/i1099ac.pdf



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