Do I qualify for the mortgage forgiveness debt relief act.

Asked over 3 years ago - Antioch, CA

I recieved a 1099-a form. I purchased the home in 2005 and lived in it as my primary residence until July 2011. So would I qualify? And will I have to pay taxes on this house that was foreclosed on 10/10.

Attorney answers (2)

  1. Frank Wei-Hong Chen

    Contributor Level 20

    Answered . You should qualify. Under the Mortgage Debt Forgiveness Tax Relief Act of 2007 (applicable till the end of 2012), you might not need to pay any income tax on canceled debt (which is the unpaid loan balance that is forgiven by lender) resulting from a foreclosure, short sale or deed in lieu of foreclosure if you as the borrower satisfy certain conditions for mortgage tax relief (e.g., principal residence, owned for at least 2 years, debt amount of $2 million or less).

    IRS Code section 121 defines "principal residence" as: ". . . during the 5-year period ending on the date of the sale or exchange, such property has been owned and used by the taxpayer as the taxpayer's principal residence for periods aggregating 2 years or more. "

    For more information on debt foregiveness, 1099-A and 1099-C, see:

  2. Steven Alan Fink

    Contributor Level 20

    Answered . You should not have to pay ant taxes regarding the foreclosed property. The property taxes are a lien against the property, not against you personally. Foreclosing bank or new owner wiil be responsible for payment.

    The response given is not intended to create, nor does it create an ongoing duty to respond to questions. The response does not form an attorney-client relationship, nor is it intended to be anything other than the educated opinion of the author. It should not be relied upon as legal advice. The response given is based upon the limited facts provided by the person asking the question. To the extent additional or different facts exist, the response might possibly change. Attorney is licensed to practice law only in the State of California. Responses are based solely on California law unless stated otherwise.

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