Tax Consequences of Foreclosures in Scottsdale

What are the different tax consequences of foreclosure?

When you fall behind on your mortgage payments to the point of losing your home, you may be subject to taxation. Foreclosure is treated as a sale for tax purposes, which means that the fair market value (FMV) of your home at the time it is repossessed will be considered income and will be taxed by the IRS. This is known as a reportable gain from the disposition of the home.

You may also be taxed for cancellation of debt. If you default on your loans and your lender chooses to forgive the remaining deficit, that amount will be taxed as income. Non-recourse loans are not taxable after forgiveness or foreclosure, however. A non-recourse loan is one which, upon default, cannot be remedied by the lender in any other way except foreclosure. If you are foreclosed upon because your lender cannot go after any of your other assets, then you should not be taxed for the disposition of your home like you would be in recourse loan situations.

Get Legal Tax Help in Case of Foreclosure

Take action immediately if you are facing foreclosure and are concerned about the tax consequences that may be involved. Attorney Grant N. McKeehan could answer any questions you may have and counsel you as you seek to avoid foreclosure and fight unnecessary taxation. Call now to schedule a consultation appointment with the firm.

Find a Scottsdale Federal Tax Attorney

With more than nine years of experience in estate law and federal tax planning, Grant has extensive skill and knowledge in these areas and could assist you in building and protecting your estate. Only a trained attorney could help defend you from harmful taxes, so call the offices of Grant N. McKeehan, PLC to learn what could be done on your behalf.