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Received 1099-A as a result of foreclosure?

April 26, 2017Business Finance foreclosure Other - Taxes received taxes

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Received 1099-A as a result of foreclosure?

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Hold on. There is a HUGE difference between getting a 1099-A and getting a 1099-A and a 1099-C. The 1099-A is the “sale” of the property and needs to be reported on schedule D. (Losses on the sale of your home are not deductible.) The problem is figuring out the sales price when there are two loans. If both loans are non-recourse, add the forms together and your sales price is the total of the loan balances. If both loans are recourse loans, the sales price is the FMV of the property and you will have POTENTIAL cancellation of debt income for the shortfall. If only the second loan is recourse, then the POTENTIAL cancelled debt is only the shortfall on the second loan. While you report he “sale” in the year foreclosed, you do not report the cancelled debt until it has actually been cancelled.