California Foreclosure, no 1099?

[Lacerta]

I work the front desk in a real estate/property management office. Therefore, I meet a lot of people who are either doing a short sale, have done a short sale, or have lost their homes to foreclosure. To my knowledge, only one of them has actually received his 1099C. Most of them have never received one. I don't think most of the banks are sending them out, even though they are required to do so. I wouldn't worry about it unless a 1099 shows up, which is what it sounds like you are doing anyway.

Per IRS Pub 523 I can exclude up to $250,000 on the sale of a home if it has been my main residence for two of the last five years (which it has). Problem solved?

I didn't look up the specific document you are referring to, but this sounds like the capital gains law, and wouldn't apply to cancellation of debt.

[N M]

Originally Posted by Lacerta

I work the front desk in a real estate/property management office. Therefore, I meet a lot of people who are either doing a short sale, have done a short sale, or have lost their homes to foreclosure. To my knowledge, only one of them has actually received his 1099C. Most of them have never received one. I don't think most of the banks are sending them out, even though they are required to do so. I wouldn't worry about it unless a 1099 shows up, which is what it sounds like you are doing anyway.



I didn't look up the specific document you are referring to, but this sounds like the capital gains law, and wouldn't apply to cancellation of debt.

Hi. No debt cancelled. When they took the house, California's "one action rule" took over. Debt is satisfied in full since it was a non-judicial foreclosure.

The "gain" would have been on the IRS side - the 12K difference between what I paid for the place and what the balance of the loan was when they took it. H&R Block says it's treated as if I sold the house.

All done now, (I hope). Thanks.

[justinbro2002]

Was your loan underwater when it was foreclosed? If it was you will be getting a 1099 A or C if it was not underwater and had some equity the bank probably kept any procedes that could have been realized for lawyer fees and realty agent commissions. If you loan was underwater the bank will issue a 1099 so that they can write off the loss if they don't issue one they can't get the tax deductions. By California law the loss was realized when they foreclosed non-judicially and they can not sue you but there may still be a cancelled debt. If your refinance was a cash-out depending on how much you took out you can use the mortgage forgiveness act to eliminate some of the cancelled debt or depending on your assest you may want to consider filing insolvency.