Question

I lived in my house over 5 years but now I need to submit a deed in lieu. How will this affect my taxes. Do I have to report it as a canceled debt or the sale of a hom

Forum|Forum|7 years ago
June 5, 2019
3 replies
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ItsDeductible Online

O

Opus 17

Employee

I don't understand what you are being asked to do. Can you provide more details?

L

ladysah1Author

I just wanted to know if I will be taxed if the bank accepts my offer of a deed in lieu

O

Opus 17

Employee

With a deed in lieu of foreclosure, any forgiven loan amount that is more than the value of the property will be considered taxable income and you should expect to receive a form 1099-C for cancellation of debt.

You may be able to reduce the tax you owe on this income if you are insolvent at the time of the debt cancellation using form 982. turbotax online does not support this form, and Turbotax desktop version (installed on your computer from a CD or download) includes the form but with no help or guidance. You may want to consult a professional.