sinebar
Joined: 03 Jun 2008
Posts: 1
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| Posted: Tue Jun 03, 2008 8:47 pm Post subject: Mortgage insurance, forclosure and taxes |
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| If a mortgage company forcloses on my house and the mortgage insurance pays off the loan, will I have to pay taxes next year? In other word is such a payed off mortgage considered a forgiven debt? |
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m2c
Joined: 03 Aug 2005
Posts: 767
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| Posted: Wed Jun 04, 2008 9:53 am Post subject: |
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I assume you're talking about REAL ESTATE taxes. After a completed foreclosure you no longer own the property. Why pay taxes on something you no longer own? If real estate taxes in your states and collected in arrears, the government typically gets paid first and collects at the foreclosure sale. Real estate taxes normally are against the property, i.e., no personal liability.
Congress gave you a free pass on FEDERAL tax liability on your gain via "forgiveness of debt". I doubt if state would try to pursue. |
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