Tax Reduction Letter - Bank Foreclosure Auction

Article Date:

November 2010

Word Count:

665

Bank Foreclosure Auction

Question

I paid $480,000 for our home. It’s now worth $200,000, and I owe $400,000 on the original nonrecourse mortgage. The bank has already foreclosed and sold the house at auction for $200,000. What is our tax situation? (T.S., Brentwood, Calif.)

Answer

You don’t have a tax problem, because your foreclosure and discharge of indebtedness occurs after 20061 and before 2013.2

In a foreclosure, there are two steps to finding the tax situation:

Calculating your gain or loss

Calculating your forgiveness of ... Log in to view full article.

Already a subscriber?

User Name

Password

You’ll be able to read the full article and get instant access to the last few issues of the Tax Reduction Letter

Not yet a subscriber?

with a money-back guarantee