how to get foreclosure tax relief
Post on 09-May-2015
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How to Get Foreclosure Tax Relief
Contents
Introduction ..…………………………...1
America Tax Laws………..……….…...2
Form 1099-C…………………..………….2
Assets and Liabilities………………....2
Payment agreement…….………......3
If you borrow money from somebody and do
not repay some or all of it, then the Internal
Revenue Service says that you received an
income, and as we know, they tax all incomes
too. This has undesirable side-effects for
those whose homes are foreclosed because
they also have to pay tax on the experience
too. This is not always necessary, though.
Here is how you might be able to avoid it.
American Tax Laws
2
American tax law says that when a debt forgiven in
foreclosure exceeds the fair market value (FMV) of the
mortgaged house, then the difference is income, and
therefore taxable. That is because the borrower “received” a
greater benefit than they would have if they had sold the
house themselves.
What’s does that mean?
For more terms and definitions, check out ForeclosureDeals.com’s glossary page: http://www.foreclosuredeals.com/Glossary.php
Your lender is obliged to provide you with a Form 1099-C on
which the debt forgiven and the FMV both appear. If your
home has already been auctioned, the FMV will be the sale
price. If not, your lender may have indicated a higher estimate.
This is one good reason not to let things like this drag on – if
you are lucky, the estimated higher FMV could be to your tax
advantage. In either case, determine whether the foreclosure
resulted in a "taxable income” or not.
Form 1099-C
Assets and Liabilities
You may offset any negative net worth against a “profit” on a
foreclosure. This is easy to calculate too. Simply estimate the
value of your total assets (car, television, clothes etc) and
compare this with the total of your outstanding debt. If the
result is a negative value, this can come off your “taxable
foreclosure income” too, potentially helping you to manage
your foreclosure tax obligations even more.
3
Foreclosure Deals
12550 Biscayne Blvd, Suite 306 Miami, FL 33181 FAX: 1-347-402-6620 Contact@foreclosuredeals.com
If it’s not a deal, we won’t list it here!
Find us on the Web: http://www.ForeclosureDeals.com/
If your calculations fall to your advantage, contact the
Internal Revenue Service right away. If you still owe
“foreclosure income tax”, that could be a good opportunity
to negotiate a further reduction in your overall tax liability.
Payment Agreement
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