Form 1099-C

[yugin]

We sold our home last year in short sale. Today we've received 1099-C. I am not sure about the numbers they reported. Our loan/mortgage amount was about $205,000. House was sold for $168,000. Form 1099-C says amount of debt cancelled $12,890 and fair market value $149,100.

Is amount of debt cancelled supposed to be 205,000-168,000=37,000 ? Or that is not that simple?

[jmw1212]

I had several of those unfortunately this year and another next year. I am in chapter 7 bankruptcy so this may effect things different... anyway:

I called my CPA and the way I understand it is this: you start off with a basis (what you paid and have in the property) then you have the foreclosure sale and it sells for much less. You now have a deficiency, which gets 1099's as income.(if your in bankruptcy it should be forgiven though) Basically, you take the amount you purchased it for, add anything you have done to the property, that becomes your "basis" Then you take the 1099 charge off and the difference becomes your loss or profit. In our case and yours is was a loss, so the amount you lost will be added to your tax return up to 3,000 per year, it will continue until you have expended all that you have lost.To make it easier to understand, if you have a loss from what you put into the property, you should have a tax write off up to $3,000 per year until it's used up. GL

 

PS: It sounds like the 1099 should have been for the deficiency of $37,000. That's the way it works here in GA, I don't quite understand the FMV. I would like to hear what others suggest on this one:) Keep me posted:)

 

We sold our home last year in short sale. Today we've received 1099-C. I am not sure about the numbers they reported. Our loan/mortgage amount was about $205,000. House was sold for $168,000. Form 1099-C says amount of debt cancelled $12,890 and fair market value $149,100.

Is amount of debt cancelled supposed to be 205,000-168,000=37,000 ? Or that is not that simple?

Edited January 28, 2012 by jmw1212