I have had properties foreclosed on recently. The lender bought it back at the sheriff sale.?

Question

I am curious to know what the tax ramifications will be. I am certain the bid what was owed on the property including all of their legal expenses, late fees, etc. If they sell it for much lower, will they automatically "forgive" the debt thereby causing me a big tax burden? If they don't forgive the debt, is it just let go and the bank accepts the loss? What is the next step? I am f'ed financially as my foreclosure is an example so I can't take paying capital gains on say $200,000. I have read that if they don't agree to a short sale prior to foreclosure and they don't sue for a deficiency judgment then I'm in the clear. I've also read otherwise. Please help!

Answer 1

The federal government made some changes, which could mean that you will not be getting a 1099 for the difference between what you borrowed to buy the house, and what the bank was able to sell the house for.  According to the following link, the foreclosure process protects you from that 1099 possibility.

http://www.foreclosurefish.com/blog/inde...

Answer 2

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