topic Converted house to a rental in 08 . BK7 in 13. House was included. 2019 bank foreclosed. Nothing was sent to me. I guess I need to fill out a 4797. Is that correct? in Investors & landlords

Converted house to a rental in 08 . BK7 in 13. House was included. 2019 bank foreclosed. Nothing was sent to me. I guess I need to fill out a 4797. Is that correct?

pgm — Mon, 03 Feb 2020 01:29:36 GMT

Re: Converted house to a rental in 08 . BK7 in 13. House was included. 2019 bank foreclosed. Noth...

RobertG — Mon, 03 Feb 2020 20:58:10 GMT

The IRS requires you to report the gain or loss on a foreclosure on your tax return.

If your rental house is foreclosed on, the IRS views it as a sale. This requires you to report the gain or loss you incur on your tax return.

the foreclosure increases the complexity of the transaction for tax reporting purposes since you must consider other factors, such as whether you are still responsible for any remaining mortgage debt after the bank takes possession of the rental house.

The IRS requires you to report the foreclosure and the resulting gain or loss on a Form 4797. If the foreclosure results in a long-term capital gain, then you also need to include the amount on a Schedule D attachment to your personal tax return.

For further information please see the TurboTax website: How to Report a Foreclosed Rental House on Your Taxes

Re: Converted house to a rental in 08 . BK7 in 13. House was included. 2019 bank foreclosed. Nothing was sent to me. I guess I need to fill out a 4797. Is that correct?

Carl — Mon, 03 Feb 2020 21:29:01 GMT

2019 bank foreclosed.

You may or may not get a 1099-C on this for 2019. Wouldn't be surprised if you didn't get a 1099-C until next year for the 2020 tax year. Backs absolutely *HATE* with a passion, owning real estate. They prefer to unload foreclosed property as fast as possible, and sometimes at "any" price. The proceeds from the sale will be used to pay down what you owe on the mortgage. If it doesn't cover the outstanding balance completely, then you'll get a 1099-C for the difference and that difference will be taxable income to you.

If they sell it for more than your outstanding balance on the loan (plus the banks cost to foreclose and then dispose of the property) they are required to pay you the difference, and you'll be send another tax form for that difference. (I think it's a 1099-R - but not sure.)

Now if your state also taxes personal income, I would 'HIGHLY" advise you not bother with trying to do your 2019 tax yourself. Get professional help yesterday, if not sooner. If you report this on your 2019 tax return and then later receive tax reporting documents from the bank, I can assure you that you'll find yourself in a never-ending nightmare with the IRS from which you will never awaken. It'll make the cost of the professional help you didn't get, seem like a pittance.