DoI have to file bankruptcy in order to avoid paying taxes on the foreclosure of my home?

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DoI have to file bankruptcy in order to avoid paying taxes on the foreclosure of my home?

Asked on February 14, 2012 under Bankruptcy Law, California

Answers:

Mark J. Markus / Mark J. Markus, Law Offices of

Answered 9 years ago | Contributor

Bankruptcy is a way to avoid the inclusion of forgiven debt in your gross income, but you should check with a real estate or tax attorney regarding whether there would actually be any potential tax liability in your situation.   In most cases, it is only junior mortgages that either come after you for a deficiency judgment, or issue a 1099 for forgiveness of debt income, and there's new federal laws governing under what circumstances they can do that, so it's important to find that out before deciding on your best option.

If you have multiple properties, the timing of the foreclosure in relation to any bankruptcy case can also be critical, so you will want to get the opinion of a bankruptcy tax expert to determine the optimal strategy for you.

Mark J. Markus, Attorney at Law

Handling exclusively bankruptcy law cases in California since 1991.

http://www.bklaw.com/

bankruptcy blog: http://bklaw.com/bankruptcy-blog/

Follow Me on Twitter:  @bklawr

 


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