Does foreclosure count as "selling a property" to the IRS?

Question

I almost lost my house but before foreclosure, I signed it over to a friend so I am no longer the owner. Does this count as a sale, transfer, or what in the eyes of the IRS? How do I report this on income taxes?

Answer 1

Almost losing a property to foreclosure is not a foreclosure. Deeding the house over to a friend, however, is selling the house in the eyes of the IRS.

Answer 2

It is not a foreclosure if you signed the quit claim before foreclosure was processed. It would be a property transfer if no money changed hands. How was the transfer recorded, as a sale, or just a transfer. That is the way the IRS will see it too.

Answer 3

You sold the property when you transferred the title to your friend. You might have had a loss or a gain on the sale. You might owe taxes or you might not.

File your tax return and write up the sale just like any other sale. There was an agreed price (the balance of the loan if you just signed it over). If you do not know how to write it up get Turbo Tax or have a tax preparer do your tax return for the year in which you sold the property.