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owner75 · Jan 29, 2010, 12:43 AM

If I have no cancellation debts and my outstanding principal is less than the FMV in box 4, do I still have to include schedule D with my return?

ebaines · Jan 29, 2010, 06:48 AM

No, you do not need to include this on your tax return. The 1099-a is for information only. If the FMV had been less than the outstanding principal they would send you a 1099-C to document the amount of foregiveness.

There is one exceptoin - if the outstanding principal of the loan is more than your cost basis in the house then you do have a capital gain, and so would need to report the sale on schedule D, but only if you do not qualify for an exception (that is, if the home was not your princiipal residence, or if you didn't live there at least 2 of the previous 5 years).

owner75 · Jan 29, 2010, 06:58 PM

Originally Posted by ebaines

No, you do not need to include this on your tax return. The 1099-a is for information only. If the FMV had been less than the outstanding principal they would send you a 1099-C to document the amount of foregiveness.

There is one exceptoin - if the outstanding principal of the loan is more than your cost basis in the house then you do have a capital gain, and so would need to report the sale on schedule D, but only if you do not qualify for an exception (that is, if the home was not your princiipal residence, or if you didn't live there at least 2 of the previous 5 years).

Thanks, man. Do I have to report this as a sale of my property? I maintain this property until march of 2009 before the bank took over.

ebaines · Jan 29, 2010, 08:40 PM

Originally Posted by owner75

Thanks, man. do I have to report this as a sale of my property? I maintain this property until march of 2009 before the bank took over.

Only if you have a gain, AND only if you don't qualify for an exclusion, as described earlier.

owner75 · Jan 31, 2010, 06:18 PM

Originally Posted by ebaines

Only if you have a gain, AND only if you don't qualify for an exclusion, as described earlier.

The foreclosure process was finally completed in March of 2009. This property was part rental and part residential property. Do I just disregard my expenses related to maintaining this property in 2009? In other words, I had to maintain the property from January to March 2009 until the bank took over. Do I have the right to take a loss using Sch E? I did not get any rents for that short period but had to fork up money to pay for city violations caused by my tenants because they were coming after me hard. Or does the 1099-A mean I'm totally off this property?

ebaines · Feb 1, 2010, 06:56 AM

To be honest I'm a little out of my league on this, BUT it would seem to me that if this is a business property then you would have to report the sale. Don't forget that if you have been taking depreceiaton on the property in previous years your cost basis is reduced by that amount, which makes it more likely that you do have a gain to report. My comments earlier were assuming that the property was personal (first or second home). Your expenses in suport of your business while you owned the propetry (through March) are of course deductible in support of your business expenses, as I'm sure you did in previous years.