Debt Relief Mortgage Act
Do I get to deduct mortgage interest on a foreclosure?
If one forecloses on a home, I understand I would be either issued a 1099-A or the debt could forgiven, but not both. On the 1099-A is it just Fed taxes you pay if you don’t qualify for the Mortgage Debt Relief Act or does the State get a piece also. I do not know of anybody having to pay on these 1099-A situations.
Unless you actually paid the interest, you don’t get a deduction.
As for the 1099-A,. it represents the “sale or other disposition” of the property. Report the “sale” on schedule D. You only have taxes if you have a gain.
The rules for the 1099-C are different. See IRS pub 4681.
What is the Mortgage Forgiveness Debt Relief Act of 2007?
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