If you discharge mortgage debt in bankruptcy, you will not owe taxes on the discharged amount.
If you discharge mortgage debt in bankruptcy, you will not owe taxes on the discharged amount.
Ok I assume you're answer means ALL mortgages, whether those mortgages are for Investment properties or Principal residences?
If my assume incorrectly, please do correct me.
Thanks for your reply.
Depends whether the loan and been forgiven before the bankruptcy got filed or not. If you've been foreclosed and they issued the 1099, that's income if you don't meet the insolvency requirements to exclude it and it's just more tax liability that you bring to foreclosure. If they foreclose AFTER bankruptcy starts, then you're no longer liable for the debt and while they can take the house, it's not a forgiveness to you at that point (not taxable). It makes no different what kind of mortgage it is. (The principal residence issue is only important without the bankruptcy as purchase money loans are non-recourse in California so if they foreclose, you don't owe them further anyway).