Hey, this is Jairus Jill Cortina. Thank you for joining us in our QA session on the questions homeowners have when facing foreclosure. This question is related to taxes and deficiencies. So, what is Form 982 with the IRS? To provide some context before I ask Joe the question, I want to mention that he's been feeling a little sick but seems to be better now. Before we proceed with the full question, if you're looking for more information, you can find it in the Mortgage Forgiveness Act of 2007. Specifically, look for Form 982, which will provide the same information that Joe is going to explain. Basically, if your debt is related to your principal residence and you meet the qualification of having lived in the home for two of the last five years (not necessarily consecutively), you won't have taxable income on the debt. Now, should we discuss insolvency? Form 982 is the form you need when dealing with insolvency. So, there are two sides to this coin: being a primary resident and living in the home for two out of the last five years, and receiving a 1099 form from your lender to write off the presumed owed taxes to the IRS. However, this is mainly applicable to homeowners who are insolvent, meaning they are facing financial difficulties regarding their investment. The Mortgage Forgiveness Act protects primary residents, but investors need to do a balance sheet to calculate how much they've invested and lost. Form 982 determines if you owe any taxes. So, if you're a real estate investor and facing underwater properties, you can still engage in short sales and be covered because you're likely insolvent. Insolvency means you owe more than what you have. Hopefully, this answers your questions. If you want more information, search...
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Irs 982 instructions 2024 Form: What You Should Know
These documents usually take several months to prepare and are not intended to replace your own tax return or the preparation of any tax return for which you may be liable. The IRS assumes no responsibility or liability for the accuracy or currency of information in any release, and no representation is made as to its comprehensiveness or accuracy. This is a PDF-only document.
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