I received a 1099-A today...do I owe money?

[hinese]

What is the name of your state?What is the name of your state? Texas

My house was foreclosed on in January 2004. Today I received a 1099-A from the mortgage company.

Information from the 1099-A form:
The Balance of principal outstanding is $116,561
The Fair market value of property is $123,684

Other facts:
I paid $119,790 for the house in 2001....$125,164 including closing costs
I put down $5,909, resulting in a loan amount of $119,255

What does this mean to me? Do I owe money? Please say no! I couldn't afford the house payment. I certainly can't afford the taxes.

Thanks.

 

[Kansas4me]

I am assuming this is a non recourse debt.

You figure your gain on the loss of the house by taking the amount realized (the purchase price of the house, minus any adjustments such as casuallty loss) and subtracting the amount of the loan that was written off.

In your case, you said you bought the home for 119,790 and the balance at the time of foreclosure was 116,561, so you have a LOSS of 3,229. Loss's are not deductible.

Now if you had to file a claim with your insurance, you would have to deduct that from the 119,790.

(this is discussed in greater detail in IRS pub 544. www.irs.gov)