Personal losses on property are not deductible. At the time you bought the home the home was valued and you received $ from the lender based on the FMV at the time, you never paid back the principal you borrowed, ultimately you got money of value that you used to buy a home and used the home as collateral for the loan. While you had a loss on the property, other similar properties values were lower and their costs were lower, you still got value that was never paid back. Interest and principal are wholly different. your lender determines the amount of the 1099-C you will have to discuss with them how they calculated the loan forgiveness amount. In foreclosure the FMV of the property is often far less than what you may think and the banks often sell for far less and have other costs. TT handles the calculations
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