Paid $200,000 for second home in miami in 2006.
Got a 1099c for $80,000. This is for 2010, and i have not filed 2010 taxes. Just an extension.
still can’t figure out how to handle 2010 taxes which i have not yet filed. I think i am too old for all of this. I don’t have the short sale agreement in front of me. It was handled by King Realty in Miami.
What i can’t seem to find out is approximately how much additional taxes i owe for this 2010 short sale. I paid $200,000 for the house in North Miami Beach in 2006. Myprimary residence is Maryland. I think I owed $180,000 when the short sale occurred.
I received a 1099c for $80,000. Actually there are ftwo 1099′s. One for the 2nd of $5,000 for debt forgiveness of $25,000. So I think the outstanding mortgage on the first was $160,000 on the first, and got the $80,000 1099c on that. My question is, assuming I normally have a moderate
taxable income, and pay a few thousand dollars in federal taxes, how much additional will i have to pay on the $80.000.
thanks in advance
Thanks for the question.
It seems to me, from the information presented, that you do not have income on the property- but rather a loss.
This transaction should be treated as a “sale” and therefore, the cancellation of debt is merely figured into your basis in the property.
If you bought a rental property for $200,000 with a loan for $180,000 and cash of $20,000 – and you lost the property – you ultimately have a loss on the property, despite the Form 1099-C.
Without all of the details, it is hard to be specific on the treatment. Take a look at the worksheet on page 5 of this publication- it is fairly clear on how to compute the gain/loss on the foreclosure. http://www.irs.gov/pub/irs-pdf/p544.pdf
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