Last year I had two of my houses foreclosed upon. This week I got two W-2's in the mail for the difference of what I owed and the mortgage company's appraised price. Does this mean, that if I am to include this as income, that the mortgage company doesn't plan on trying to collect. Can they claim I received income and then later say it was a debt?
Thanks,
Jay Clason
Lt.Col ret.
USAR
1 Answer from Attorneys
If one of the homes was your "principal residence", you will not have to recognize gain upon it. As to the other, you may have discharge of indebtedness income. The IRS has a formula to calculate whether and how much gain you have to recognize. If the mortgage company obtained a deficiency judgment against you, you may not have to recognize the gain until they release the judgment or the statute of limitations for collection has expired.
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