QUESTION
If deed in lieu agreement is in 2013, but deed not recorded until 2014, IRS 1099 will be for what year?
Asked on Dec 09th, 2013 on Taxation - Michigan
More details to this question:
My bank has agreed to a deed transfer in lieu of foreclosure (no sale date set yet). Property is vacant and broom-swept and has passed inspection. Bank has changed the locks and winterized the property. The official settlement agreement will be signed/notarized by me as soon as I receive it. Definitely by the end of 2013, but I'm not sure if the bank will record the deed before year's end as well. I know I will be sent a 1099 for tax purposes, but what year will that be for if the agreement and deed recording take place in different years? My major concern is that the Mortgage Forgiveness Debt Relief Act only goes through 2013 and I need my deed in lieu to qualify so that I don't have yet another financial burden that I cannot manage. Thank you in advance for your time!
3 ANSWERS
Conveyance of real property occurs upon delivery of the deed to the new owner, not upon the recording of the deed. If you sign the deed and deliver it to the bank in 2013, the transaction is complete in 2013, regardless of when the bank records the deed.
Answered on Dec 13th, 2013 at 7:18 PM
General Law Attorney serving Cherry Hill, NJ
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Mark S. Cherry, Attorney at Law, PC
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The date that will trigger the tax event is when the mortgage company process the debt forgiveness. There is not even a Bill pending in Congress to extent the Act. Make sure you read IRS publication 4681 as there are other exceptions to the income and tax such as insolvency and bankruptcy. You should discuss filing a bankruptcy prior to the debt forgiveness date.
Answered on Dec 13th, 2013 at 6:00 PM
Appellate Attorney serving Grosse Pointe Farms, MI
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Musilli Brennan Associates, PLLC
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If the contract is finalized and executed in 2013, it should be accounted for in that tax year. When the deed is recorded is irrelevant.
Answered on Dec 13th, 2013 at 3:15 AM