Capital Gains Tax for people going through foreclosure.
Some of you might remember that I am working with a couple tht is going through foreclosure. One issue that people haven’t talked about is not debt forgiveness, but capital gains tax. Does anyone have info about this? I guess if you have nonrecourse loans you don’t pay debt forgiveness tax, but you might pay capital gains. Do you know how one figures out the capital gains tax? I think you subtract the adjusted basis from the debt, how do you determine the adjusted basis? Is this a negative for those who owe more than their property is worth? Let’s say you owe 600 for your place, you paid 630, and now it can only sell for 5550. Would there be capital gains tax owed to the IRS?
