When I turned 18, (2005) my parents made some shady deals with a "friend" of the family and got me approved for a home loan. they purchased a home for the family using my information. six months later, i moved out and they eventually stopped paying the mortgage, which lead to foreclosure. will i have to report foreclosure when i do my taxes this year? does anybody have any ideas of what can be done to get my credit back to normal?
2007-01-31 18:29:19 · 3 answers · asked by uigstizz 2 in Business & Finance ➔ Taxes ➔ United States
Now that we're into tax time, folks who were foreclosed on are learning a very nasty lesson: The tax consequences of a foreclosure. The debt that was cancelled through the foreclosure process is FULLY TAXABLE as ordinary income. You should receive a Form 1099C which lists the cancelled debt that was reported to the IRS. Whoever signed the mortgage note will be responsible for payment of the tax on the cancelled debt. If that happens to be you, your credit problems are just beginning.
2007-01-31 23:22:59 · answer #1 · answered by Bostonian In MO 7 · 0⤊ 0⤋
Do not do anything unless and until you receive a 1099C. In my state foreclosure does not cancel a debt. You would still be liable for the deficiency.
Also the cancellation income rules will not apply if you were insolvent at the time of the cancellation. See Publication 908.
2007-02-01 06:54:42 · answer #2 · answered by woodluvto 2 · 0⤊ 0⤋
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2007-02-03 18:32:00 · answer #3 · answered by kepler l 1 · 0⤊ 2⤋