How would proceeds from real estate, reported on 1099S, be reported on Federal Income Tax Return?
My sister and I aquired a liability in the form of a Deed of Trust in May 2005 from a parent in ill health. In Dec. 2005, we started forclosure proceedings. Early 2006, a Quit Claim Deed (In Lieu of Foreclosure) was conveyed to myself and my sister, making us full owners. We sold property under market because of deteriorating physical condition. We split proceeds. How should these proceeds be reported on Federal Income Tax Return?
Public Comments
- Based on my selling a house a while back, the proceeds are declared as capital gains which is taxed differently than ordinary income. If memory serves, each of you can exempt $125,000 each, or double for a married couple, and are taxed on the balance over the exemption amount. In my case, I had $25,000 in capital gains, which means on a future sale I still have $100,000 remaining that I could exempt. Now, take this with a grain of salt, as the sale I did was several years ago and Dubya changed the rules since then. Consult a certified tax advisor.
- Jo is confused,, you foreclosed on an ill parent?? and sold the property? hummmmmmmmm,,,,,,, so,, what amount did you have in the property? and what amount did the property sell for? and the difference is called gain or loss and tax is paid on gain,, and loss is taken against ordinary income up to $3K per year. Transaction is shown on Schedule D.
- The answer to this question is something that needs to be reviewed by an accountant. Check out this blog entry on the topic... What are the tax implications of a Foreclosure? http://www.afscanhelp.com/blog/2007/4/what-tax-implications-foreclosure.cfm
