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Foreclosure

Home Foreclosed or Abandoned

If your home was foreclosed or repossessed, you have a disposition. Your gain or loss from this disposition is figured the same way as a gain or loss from a sale. Generally, you will receive Form 1099-A from your lender if your home is transferred in a foreclosure. This form will have the information you need to determine the amount of your gain or loss and ordinary income from cancellation of debt. For more information, see IRS Publication 523. If your mortgage debt is partly or entirely forgiven by your lender, you will receive Form 1099-C indicating the amount forgiven. Normally, debt forgiveness results in taxable income. However, if you qualify, you may claim a special exclusion of this income and reduce your tax liability. For more information, see IRS Publication 4681 at www.irs.gov