Legal Question in Tax Law in California

i had a property forclosed, in short it was to be my primary residence but the bank froze funding of the build and i could not complete the home - eventually they forclosed. Now under the current law the debt is forgiven, but what about the interest they charged me ( $93,785.00) is that still deductable ??? It is noted on the 1099 they sent showing the debt.


Asked on 4/12/10, 7:34 am

1 Answer from Attorneys
Ken Koenen, LLM Law Office of Ken Koenen

You can only deduct interest that you actually pay in the year that you pay it. If they sold the property at the foreclosure sale for more than the principle balance of the loan, you would be able to deduct any portion that they applied to the interest owed. If not, you have no deduction.

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Answered on 4/17/10, 10:18 am


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