Tax Time Question: Anything about my foreclosure?

[panda]

If this was discharged during bk use form 982 and check box 1a bankruptcy.

[Flamingo]

If it foreclosed April of 2010 that means you did not make payments for quite some time prior and did not make any tax (escrow) payments in your mortgage or paid any mortgage interest for 2010. Therefore, you have nothing to deduct. You may get a 1099 by or around the end of January as to any deficiency amounts and that would be income for you for tax y ear 2010 unless you can prove to the IRS that you are insolvent via IRS standards. I suggest if you get a 1099 that you contact a tax professional to handle your taxes for you as your chance of getting audited increases if you attempt to prove insolvency. Best of luck to you.

[BobMango]

Did you get 1099'd by the bank? There is an IRS form you may need to complete to claim insolvency so that you are not liable for the deficiency balance. This is all dependent on a number of things and you may not be liable for the tax on that in any case, but filing the form will ensure the IRS doesn't come after you. I lost a rental property in California to foreclosure prior to filing bankruptcy in 2009 and filed the insolvency form. The bankruptcy discharges the deficiency balance and provides a presumption that you are insolvent, but my tax professional didn't want to take any chances.

[Ifonly]

I completely understand. One of the things I had to fight for in our CH13 was increased federal withholding. I knew that we would have a much larger tax liability without the ability to itemize.

[Amy26]

Oh thanks for the update... I wasn't really ready to file yet, but I was just curious and trying to estimate what I might owe this year. Without my mortgage interest credit... I do not believe I can itemize anymore :/ ...

[Ifonly]

Yes, you answer positively to the fact that the home was "lost". You can still claim the itemization for any mortgage interest/real estate taxes you did pay during 2010. Other than that, I don't believe it should affect your taxes. However, please note you can not e file a 2010 tax return right now. Tax season has been delayed until mid to late February to allow the IRS to update the regulatory changes from the 2010 tax legislation. You'll be able to download updates for your Turbotax but if you itemize, you need to wait.

[Amy26]

Hihi, I was just wondering. My condo that I let go in my bk foreclosed in April of last year. Do I need to do anything on my taxes when I file this year to let the IRS know I lost the house?

I ask because I have been taking in prior years the real estate credits and now of course I won't be ... and on the turbo tax screen it is asking me about changes in 2010 and it says "bought, sold refinanced or lost real estate" ... so, I didn't know if my foreclosure counts as "lost" in that category?