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taxes on foreclosed property

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lasmora

Junior Member
What is the name of your state? AZ

If you have a foreclosure and the bank does not sell the property for the amount owed on the loan are you always taxed on the difference between the sales price and the mortgage balance?
 


irsos

Member
What is the name of your state? AZ

If you have a foreclosure and the bank does not sell the property for the amount owed on the loan are you always taxed on the difference between the sales price and the mortgage balance?
No, if it was addressed in a bankruptcy proceeding or you were technically insolvent at the time of the foreclosure - it is excludable from income. Technically insolvent simply means your liabilities exceeded your assets at the time.
 

LdiJ

Senior Member
No, if it was addressed in a bankruptcy proceeding or you were technically insolvent at the time of the foreclosure - it is excludable from income. Technically insolvent simply means your liabilities exceeded your assets at the time.
I agree, however it is also not taxable if the fair market value of the property is higher than the loan balance, regardless of the selling price.
 

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