Debt Relief Facts
Frequently Asked Questions About Debt Relief
Learn more about debt relief facts with these Frequently Asked Questions about debt relief on a foreclosed property.
How do I know whether or not title has transferred on a foreclosed property?
A: Check in with the local title company or call the lender.
Q: If a buyer gets two mortgages at the time of a purchase, are they both acquisition debt AND both nonrecourse?
A: They are both aquisition debt, however, the second trust deed may be recourse by the terms of the deed of trust. The first is not by operation of law.
Q: In a judicial foreclosure, how long does the lender have to hold the property before sale?
A: For one year.
Q: Are rental property mortgages recourse?
A: Yes they are.
Q: Can you use the new rules for qualifying residence debt exclusion and insolvency for nonqualifying debt?
A: Yes. You can use the exclusion for qualifying debt and the insolvency exception for the nonqualifying discharged debt per Publication 4681. However, if the qualifying residence debt exceeds $2,000,000.00, you cannot exclude the excess under the insolvency exception.
Q: If I have multiple foreclosures, do I compute insolvency for each one?
A: Yes. You are allowed the exclusion only to the extent of insolvency at the time of each debt cancellation.
Q: If a taxpayer does not receive a 1099-C, is COD still income?
A: Yes. Many taxpayers do not get the forms because they move or fail to notify the lender of their current address.
Q: Where do I report COD income from a rental or business foreclosure?
A: Nonbusiness COD income goes on Form 1040, line 21 (Other Income), rental COD income goes on Schedule E and business COD income is reported on Schedule C.
Get Discounted Office Products at the Bookkeeping Supplies Store
Return to Bookkeeping FAQ
Return from Debt Relief Facts, to Bookkeeping Basics Home Page
ABOUT ME ~ CONTACT ME ~ FAQ ~ SITEMAP ~ SITESEARCH