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
Jim Buttonow is one of the resident debt experts here at GetOutOfDebt.org that helps people for free. Jim is a licensed CPA who spent 19 years with the IRS coordinating large compliance teams of IRS agents and specialized personnel. In the last 5 years, Jim has invented consumer and practitioner software and treatises on how to address many different tax issues. He has also represented many people before the IRS examination, collection, filing, and appeals functions. He currently assists taxpayers on an active pro bono tax practice aimed at serving people in need. He can be reached at IRSMind.com.
If you have a tax question you’d like to ask just use the online form. I’m happy to help you totally for free.