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neilsen69
Jun 26, 2009, 11:05 AM
My wife and I lost a second home to foreclosure. Should we be expecting a 1099 for the balance that was still owed after the sale.
MukatA
Jun 26, 2009, 12:21 PM
Yes, if debt was canceled, you should get 1099-C. Cancel debt is reported as income on the tax return.
Foreclosure is reported as sale on schedule D. However, if you owned the house and live in the house for two years in past 5 years, then you can exclude gain of up to $250,000 ($500,000 if both qualify). Also there is a special relief in case of foreclosure. Your U.S. Tax Return: Foreclosure or Repossession of Main Home (http://taxipay.blogspot.com/2008/08/foreclosure-or-repossession-of-main.html)