Foreclose on Property with more than one owner

[Mensa1]

So if the cancellation of debt is lets say $50k .. both borrowers will be taxed individually? Meaning double tax? To add another twist - basically the borrowers are my father and I. House bring foreclosed on is my father's primary residence. It was also my primary residence for about 6 years. What does this mean as far as the Mortgage Debt Relief Act that states principal residence not being taxed?

I really appreciate any inputs.

Well it immediately means that Dad doesn't have to worry here since it will qualify under the MDRA. How it will effect you I am not entirely sure... but who is the primary borrower? That is who will likely receive the 1099C.

Also, as it relates to you, the amount taxable depends on your finances. Are you insolvent: (debts exceed your assets prior to this mtg debt being forgiven)...? If so, and depending by how much you are insolvent, you may not have a tax liability either.... even if you receive a 1099C.

No, you will not have to pay double taxes on the cancelled debt, no matter what the circumstances. I'm thinking as long as the mtg is classified in the lenders records as his/yours pers res then you may not even get a 1099C, and if you do the documentation for taxes is pretty easy.

[spinner]

Well it immediately means that Dad doesn't have to worry here since it will qualify under the MDRA. How it will effect you I am not entirely sure... but who is the primary borrower? That is who will likely receive the 1099C.

Also, as it relates to you, the amount taxable depends on your finances. Are you insolvent: (debts exceed your assets prior to this mtg debt being forgiven)...? If so, and depending by how much you are insolvent, you may not have a tax liability either.... even if you receive a 1099C.

No, you will not have to pay double taxes on the cancelled debt, no matter what the circumstances. I'm thinking as long as the mtg is classified in the lenders records as his/yours pers res then you may not even get a 1099C, and if you do the documentation for taxes is pretty easy.

Mensa1 again many thanks for your inputs. Looking at the loan documents looks like my father and I are the borrowers - no co borrower stated. Unfortunately I am not insolvent. But I am somewhat relieved that a double tax on canceled debt don't constitute double tax - I will verify further with a CPA.

[Mensa1]

Spinner: When the annual 1098/1099 comes for repoprting interest paid for tax deduction, whose SSN is listed on it? That should give you a clue as to who should receive the 1099C. Best guess, anyway.

[spinner]

Verified from the mortgage interest yearly statement that my SSN as well as my dad is on it. So this means we will both each get a 1099-C? If so then do we file 50/50 of the tax liability or could we file under one of us. Ideally we should file only under my dad because the home is his primary residence.

[Mensa1]

Not certain here Spinner. Best to get that asnwer from your tax preparer. GL