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    neilsen69's Avatar
    neilsen69 Posts: 4, Reputation: 1
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    #1

    Jun 26, 2009, 11:05 AM
    Foreclosure and 1099
    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's Avatar
    MukatA Posts: 7,110, Reputation: 176
    Tax Expert
    		  
    #2

    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
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