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Tax consequences of foreclosure

By: Meg Dilts

There are two possible consequences you must consider: 

  • Taxable cancellation of debt income.(Note: As stated above, cancellation of debt income is not taxable in the case of non-recourse loans.)
  • A reportable gain from the disposition of the home (because foreclosures are treated like sales for tax purposes).(Note: Often some or all of the gain from the sale of a personal residence qualifies for exclusion from income.)
Talk to a tax professional about the tax consequences.


Source: The Internal Revenue Service


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Date Added: 2009-04-08 Views : 201

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