Cancelled Debt Foreclosure Taxable

If the bank foreclosed on your house or you abandoned it, and the lender cancelled your debt, you may receive IRS forms from the lender regarding that cancelled debt. Your lender may send you an IRS Form 1099-A, Acquisition or Abandonment of Secured Property or an IRS Form 1099-C, Cancellation of Debt. If you used the debt to purchase, build, or substantially improve your primary residence, that debt may qualify as “acquisition debt,” and be eligible for the Home Mortgage Debt Forgiveness Relief program. If you have received either Form 1099-A or Form 1099-C, the IRS recommends you review IRS Publication 523 and 525 to determine whether you must include the debt amount on your tax return as income.

This article does NOT constitute tax advice. If you desire tax planning or assistance, seek a qualified professional.

Carlos L. McDade, Esq.

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