BulldogTom Posted April 9, 2011 Report Share Posted April 9, 2011 Taxpayers home is in Stockton, ground zero for the mortgage meltdown. Familiar story, husband loses job, can't pay mortgage, can't sell because underwater, etc. So the client finds a buyer for the home on a short sale and the bank agrees. Client moves out in 11/09 and the sale goes through. Client recieves a 1099C in 2010 for the 187K of forgiven debt. All good so far. No issues. But the client also got a 1098 Mortgage interest statement for 2010 where all of the back interest was paid. Over 23K. Can this be deducted on Sch. A? Tom Lodi, CA Quote Link to comment Share on other sites More sharing options...
imjulier Posted April 9, 2011 Report Share Posted April 9, 2011 I'm wondering who actually paid the interest...if it was really them and interest had to paid as a condition of the short sale, then definitely Sch A. If not paid by them, which I'm guessing it was not, then no schedule A. I assume this is why you have a question about it as well. Maybe need to get more info from the tax payer? Julie Quote Link to comment Share on other sites More sharing options...
Pacun Posted April 10, 2011 Report Share Posted April 10, 2011 Taxpayers home is in Stockton, ground zero for the mortgage meltdown. Familiar story, husband loses job, can't pay mortgage, can't sell because underwater, etc. So the client finds a buyer for the home on a short sale and the bank agrees. Client moves out in 11/09 and the sale goes through. Client recieves a 1099C in 2010 for the 187K of forgiven debt. All good so far. No issues. But the client also got a 1098 Mortgage interest statement for 2010 where all of the back interest was paid. Over 23K. Can this be deducted on Sch. A? Tom Lodi, CA You must own a property and pay interest on the mortgage in order to deduct it. None of those two conditions were true in 2010 and I think you shouldn't deduct it on sch A. Quote Link to comment Share on other sites More sharing options...
DevM Posted April 10, 2011 Report Share Posted April 10, 2011 Taxpayers home is in Stockton, ground zero for the mortgage meltdown. Familiar story, husband loses job, can't pay mortgage, can't sell because underwater, etc. So the client finds a buyer for the home on a short sale and the bank agrees. Client moves out in 11/09 and the sale goes through. Client recieves a 1099C in 2010 for the 187K of forgiven debt. All good so far. No issues. But the client also got a 1098 Mortgage interest statement for 2010 where all of the back interest was paid. Over 23K. Can this be deducted on Sch. A? Tom Lodi, CA I would look at 187K forgiven debt. Was that the actual principal or did they also forgive Interest. DevM Quote Link to comment Share on other sites More sharing options...
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