[jimmy yue]

This is my investment property.
Received 1099a from bank Box2 180,000 box 4 FMV 220,000 and box 5 liable for repayment of debt... YES.Since there is a gain of the difference, that means I need to pay tax for my gain??

If I need to pay tax it is not fair at all because nowadays the FMV is no way higher than the amount I borrowed, am I right in saying that!! Please help.

What is the difference between 1009a and 1099c? If you receive a you don't have to file tax while c you have to? Please explain.


Jimmy Yue

[ebaines]

1099-A is for "Acquisition or Abandonment of Secured Propert," and is typically issued by the mortgage lender when you default. It documents the amount of the loan that was forgiven (Box 2 = $180K) and the fair market value of the property (Box 4 = $220k). So this says that you essentally sold the property to the bank for $180K: they forgave that much of the loan and in exchange they got a property worth $220K. As for your tax return, the $180K is your sales price, and since it's a rental property you will need to report the sale as part of your rental business. Don't forget that if you've been taking depreciation on the property in previous years your cost basis is reduced accordingly, so it's quite possible that you have a capital gain here.

1099-C is for cancelation of debt, and reports income to you. For you, since FMV was geater than the principal amount of the loan you should not be receiving a 1099-C for this property.

[jimmy yue]

I have a loan with a mortgage bank and a year later, I got another loan (Line of credit ) with another banker. Since I didn't pay my mortgage, my bank took over and sold it at a loss.

I understand that since the value of the first banker sold for is not enough to cover for the mortgage that I owed, obviously, the second bank in the second position hardly get anything for themselves so the second bank is sueing me for the money I borrowed.

In my opinion, since I used my house as a collateral, do I have obligation to pay back?

Even they take me to court and I am unemployed and I am a retiree, certainly there is no way for me to pay back that the money I have borrowed. Since I am in this situation, what other action can the bank do to me except they can put a lien in my property, but my property is fully paid for and I have home excemption. Can they force me to sell in order to recover their debt?

Please help. Thank you kindly.


Jimmy Yue

[AtlantaTaxExpert]

Jimmy:

You need to contact a lawyer ASAP! The laws of your individual state will dictate what the bank cacn and cannot do to you to get their money.