Mortgage Foreclosure Forms
Mortgage Foreclosure Forms
When you leave a mortgage to pay tax penalties?
This question actually refers to both sides in this equation. The borrower walks, writes the bank loan as a loss? I guess it does then the bank to seek some kind of tax relief for the loss? The borrower is beaten with a load off and / or foreclosure, and if the bank does what to recover the balance doesn't get reported as a gift or at least some of the tax consequences to the borrower? I am stuck on both sides of the fence at this time, private investors have broken due to loans that have not been repaid, and I think that borrowers can walk just because the banks arent exactly give any leiniancy for having always paid the loan in time. Sorry for both sides, but they both want answers and I do not. I'm trying to urge them to go talk to tax advisers.
In general, for a bank loan write for tax purposes, you must cancel the individual loan. There must be concrete evidence that the loan is not collectable before this happens if. Then the bank deliver a 1099-C for the borrower and the borrower must report that amount as ordinary income on your taxes. The rules could change for the borrower, if however bankruptcy. Telling borrowers to talk with their tax advisors is the best idea for you. You do not want to be giving tax advice in this situation.
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