how to write off a 50000 mortage that has become worthless.

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Dec 18, 2006, 12:16 PM

rjonesrjones

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Join Date: Dec 2006

Posts: 1

how to write off a 50000 mortage that has become worthless.

Taxable income 150000 - loss of mortage of 50000- what is the taxable income . What form is used to write off the mortage?

Answers

Dec 18, 2006, 03:42 PM	#2

AtlantaTaxExpert

Tax Expert

Join Date: Feb 2005

Location: Atlanta, Georgia

Posts: 10,013

RJones:

If the debt is truly worthless, it can be deducted as a casualty loss, which is an itemized deduction after you meet some tests and deduction floors. Based on information provided, you can claim an itemized deduction of about $34,900.

A mortgage implies that the debt was secured by property, however. When they see this deduction, the IRS will ask why you have not foreclosed and taken ownership of the property which secured the mortgage.

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