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[ Follow Ups ] [ Post Followup ] [ The Forum Board ] [ FAQ ] Tax liability for a foreclosure deficiency.... Posted by Ward-CA- on February 05, 2004 at 4:48 PM In Reply to: 1099-A from Foreclosure posted by Sara on February 03, 2004 at 7:56 AM : I received a 2003 Substitute 1099-A, Acquisition or Abandonment of Secured Property. : Can someone explain this to me? : The house was foreclosed on in September. Bank was granted possession on 11/13/03. Balance owed, 101,660.41 and FMV, 136,500 : It also says borrower was personally liable for debt. My husband filed a chapter 7 that included the house. : This is a FHA insured loan through Countrywide Home Loans. : What does my husband file on his taxes? I don't understand it. Does this mean we report the 101+ thousand as gain income? : Does the chapter 7 not eliminate this? : Please advise! : Sara ======================== Sara, A bankruptcy wipes out UNSECURED liens. A mortgage or trust deed represent secured debt and thus are not eliminated in any bankruptcy proceeding. The total you owed the bank at the conclusion of the foreclosure auction was $101,660.41. Once the bank resells the property, and determines its net sale proceeds, you'll then know if they took a loss on their loan with you. If they did you might have a tax liability for their deficiency. Congress has been investigating the area of income tax liability due to foreclosure, and has indicated its interest in protecting homeowners who find themselves subject to such an outcome. You might contact your Congressman's office for a current update on this situation. Follow Ups: Post a Followup: Name : E-Mail : Subject : Comments: : : I received a 2003 Substitute 1099-A, Acquisition or Abandonment of Secured Property. : : Can someone explain this to me? : : The house was foreclosed on in September. Bank was granted possession on 11/13/03. Balance owed, 101,660.41 and FMV, 136,500 : : It also says borrower was personally liable for debt. My husband filed a chapter 7 that included the house. : : This is a FHA insured loan through Countrywide Home Loans. : : What does my husband file on his taxes? I don't understand it. Does this mean we report the 101+ thousand as gain income? : : Does the chapter 7 not eliminate this? : : Please advise! : : Sara : ======================== : Sara, : A bankruptcy wipes out UNSECURED liens. A mortgage or trust deed represent secured debt and thus are not eliminated in any bankruptcy proceeding. : The total you owed the bank at the conclusion of the foreclosure auction was $101,660.41. Once the bank resells the property, and determines its net sale proceeds, you'll then know if they took a loss on their loan with you. If they did you might have a tax liability for their deficiency. : Congress has been investigating the area of income tax liability due to foreclosure, and has indicated its interest in protecting homeowners who find themselves subject to such an outcome. : You might contact your Congressman's office for a current update on this situation. Optional Link URL: Link Title: Optional Image URL: [ Follow Ups ] [ Post Followup ] [ The Forum Board ] [ FAQ ] WWWAdmin 2.0a © 1997 Matt Wright and DBasics Software Company, All Rights Reserved

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