If you’re facing foreclosure on your home, you probably feel like things can’t get much worse.
But they can. You see, the law treats foreclosure as if you sold your home — and you can’t deduct losses on the sale of your personal home. Worse, if the lender sells your home for less than the amount of your mortgage, the lender sends you a 1099-C for cancellation of debt income.
But don’t lose hope!
We’ll show you how to use the qualified principal-residence indebtedness exclusion and IRC Section 121 to avoid taxes on foreclosure, and taxes on cancellation of debt income.
If you ever face a foreclosure on your home,
you’ll find what you need to know in my free article:
Recourse or non-recourse mortgage — an overview
We’ll explain the rules you must follow depending you the kind of mortgage you have.
You’ll get all the facts when you read the full article.
Understanding the two types of 1099s
We’ll explain the crucial differences in detail. This is a must-read!
You’ll get all the facts when you read the full article.
How to avoid taxes on the gains with the exclusions
A foreclosure loss on the foreclosure sale of your home is not deductible. It’s a personal loss. What are the implications of this?
You’ll get all the facts when you read the full article.
Potential escapes from taxable cancelation of debt (COD) income
If you aren’t in a Title 11 bankruptcy case, you can use the qualified-residence debt-escape — and this is what we suggest you do.
You’ll get all the facts when you read the full article.