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how will a foreclosure affect our taxes?

due 2 unfortunate circumstances we had our house foreclosed on last yr. now we have the tax form for it & we were just wondering will it affect how much we get back for our refund? will we get less back because of it? just curious. thank you!

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Anonymous

Asked by Anonymous at 11:03 AM on Feb. 7, 2010 in Money & Work

Answers (4)
  • I am not really sure how this affects your taxes. We lost ours in our bankruptcy, I don't remember it ever bothering our taxes though. Call H & R Block and just ask.
    Anonymous

    Answer by Anonymous at 11:38 AM on Feb. 7, 2010

  • thanks! =) sorry about your bankruptcy...its tough out there! good luck to you in the future.
    beachmom0703

    Answer by beachmom0703 at 1:04 PM on Feb. 7, 2010

  • Did they write off the difference then? Like you were upside down in your home and then the bank DIDN'T come after you for the difference?

    If that is the case then I think you have to claim the difference as income for your tax return. Which will of course, lower your return if you even had one to begin with. This is the same for any other debt that you owe that gets forgiven. So like if you had a credit card that you owed $5000 on and you didn't pay it for months and then they offer to settle with you for $2500, then you'll have to count $2500 as income.

    If you can't pay it all upfront call the irs and work out payment arrangements with them. I think they charge $50 to even get into the making payment stage and then you can choose (within reason) how much of a monthly payment you want to make to them.

    Here's a link to a good article on the subject:
    http://homebuying.about.com/od/4closureshortsales/qt/0407TaxesForecl.htm
    Anonymous

    Answer by Anonymous at 2:27 PM on Feb. 7, 2010

  • Continue:
    Sorry you are going through this.
    Anonymous

    Answer by Anonymous at 2:27 PM on Feb. 7, 2010

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