My home was foreclosed on and I received a 1099-A showing the fair market value was MORE than the balance of principal outstanding. Am I entitled to get this difference refunded to me and how do I go about getting it if this is so? Thank you.
Generally speaking, the Internal Revenue Service (IRS) treats a foreclosure as a home sale, with any forgiven debt treated as regular income. Reporting a gain or a loss on the sale/foreclosure will depend on whether you are personally liable for the debt (which is normally determined by state law where the property is located). There are exemptions and state laws to take into consideration as well, so you should consult with a qualified tax adviser or tax attorney in your state and find out how they apply to your specific situation.
I will provide you with resources that should help educate you on foreclosure, taxes, and instructions on 1099-A forms. This may help you to head into your meeting with your tax advisor or attorney with some understanding of the basics involved.
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