Do I have to claim 1099-A and 1099-C on my taxes?

Question

I purchased my home for $360,000. It was foreclosed in 2006. I owed $280,000 on a first and $50,000 on second. I received 1099-C from 1st lienholder showing FMV $320,000 with amount canc 57,830 and a 1099-A showing FMV $242,664 with balance outstanding $36,619. I received nothing from 2nd lienholder. What do I claim on my taxes or do I even have to claim anything?

I lived in the home for 5 years.

Answer 1

How long did you live in the home?

The 1099A is treated as if you sold the home at the fair market value amount. If you lived in the home under 2 years and the FMV is more than you paid for it, you have a taxable gain. If it is less, you do not have a loss as it is considered personal.

The 1099C is for forgiveness of debt. Debt forgiven is considered other income (Line 21) unless you were bankrupt or insolvent at the time. See form 982.

Answer 2

home interest and taxes (first AND second mortgages) are DEDUCTIONS from Tax liability. You definitly want to claim this interest or you'll owe the IRS a pant load of money.

Maybe I misunderstand the question, but home mortgage interests and taxes are about the best deduction aviailable.


And you need to contact the 2nd lein holder for a statment or get his EIN number and all the data you need. But, you should report it.

Also, you are running out of time. If you don't get all docs by 4/16, file a request for extention with the IRS. It's easy to do.