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Debt Relief – Insolvency – Bankruptcy Information » Insolvency » Cancelled Debt, IRS, Insolvency, Married filing seperately, how to list assets & liabilities?

Cancelled Debt, IRS, Insolvency, Married filing seperately, how to list assets & liabilities?

Hello, I have a condo that I am in the process of short sale. The discharge of debt (1099) that I am going to get from this from the bank will be about $100K 1099. This was my primary residence but I rented it out when I got married. I lost my job and tenant, and stopped paying on it in June. My wife and I own a home together that we live in now. (not the condo) However, because of my poor credit score, the mortgage is in her name only but the deed is in both our names. How do I fill out this solvency worksheet for the IRS? If I can’t list half of the mortgage as my debt of the house that I live in now and pay for and are on the deed and have to list half of the fair market value of the house we live in, I am not insolvent. But i pay for half the mortgage, we just have the mortgage in her name for a better percentage rate. Can I plead that case to the IRS? Or can I not list my current home debt (mortgage) because I am not legally on that debt? How do I go about this? Or who should I talk to to find out? Thank you.

Sounds like the only thing I can do is file bankruptcy to get out of the tax liability.


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2 Responses to "Cancelled Debt, IRS, Insolvency, Married filing seperately, how to list assets & liabilities?"

  1. Bostonian In MO says:
    Since your name is not on the mortgage you cannot show the mortgage as one of your liabilities as you are not legally liable for its payment. The fact that you may be paying half of the mortgage payment is irrelevant.

    Since your name is on the deed though, you need to include 50% of the fair market value of the home as one of your assets.

    This assumes that you do NOT live in a community property state.

    Edit: Bankruptcy isn’t going to help with current tax debts. Sorry.

  2. the tax lady says:
    Back up.

    What was the condo worth when you started renting it?
    The loss while *you* were using it as your home is not deductible. The loss while it was rented is.

    If the market crashed *after* you started renting it, the cancelled debt income on your tax return should be limited to about the amount of depreciation you claimed while you were renting it.

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