How WIll a Foreclosure Affect My Income Taxes?

 


Video Summary

 

How does a mortgage foreclosure affect your income taxes?  Well, it should not affect your income taxes because the lender has not forgiven any of the debt on your loan after they conclude a mortgage foreclosure, so you should not receive a 1099-C, which is a report to the Internal Revenue of how much debt has been forgiven.  So therefore, you should not have any tax consequences as a result of a foreclosure action.

I have seen lenders send out what they call a 1099-A and that is a report to the Internal Revenue Service that the property has been abandoned.  That doesn’t mean that the debt has been forgiven and therefore, I am uncertain as to how the accountants are dealing with 1099-A’s whenever your property has merely been foreclosed.

So if you have any other questions about a 1099-C or a 1099-A, please give me a call at (727) 847-2288 and we can discuss it.  Thank you.