Real Estate

I have a question regarding the tax implications of a foreclosure I went through last year. I believe I may qualify for the Mortgage forgiveness Debt Relief Act, but It’s not quite that straightforward. Here’s the situation…

I purchased a condo in 2007 for approximately $500k. It was purchased as a primary residence with no intention of doing anything but moving into it and living there. My home at the time was on the market for sale and I even had a property management company attempting to rent it out for me if it wouldn’t sell. I began to move into the new condo and decorate it, while hoping my first home would sell or rent. Unfortunately, neither happened and after four months of paying two mortgages without rental income, I decided to attempt to rent the new condo as well; the new condo rented almost immediately, but at a cost much less than my monthly costs.

This was around the time the housing market was collapsing and I saw the values of both my first home and my new condo go well under water. I continued to have no luck selling my first home, so decided to put my new condo on the market as well in 2008. However, by this point, the value of the property was so under water that my only option was a Short Sale, which I received offers on, but no sales. Finally in 2010 the property was foreclosed upon for approximately $325k. I received a 1099-C in the amount of approximately $160k.

My question is: The property was purchased as a primary residence with the full intention of moving into it, however due to the above circumstances this never quite happened (I slept many nights there in those first 3-4 months, but never fully moved out of my first house). Does this qualify for the "Mortgage Forgiveness Debt Relief Act and Debt Cancellation".

Any advice would be greatly appreciated!

I don’t really have advice for you.. maybe a CPA or a Lawyer would. I do have a problem with people who over extended themselves and created this problem and then want an easy way out. People need to stop buying on credit and only buy what they can afford. I’m tired of people who have 2 houses, cars, boats, fancy furniture and also go on expensive vacations .. only to find out they over extended and now want a hand out. I have a house, 2 kids out of college with Masters.. 3 cars and I NEVER went on vacation.. I lived in my means and have ZERO debt.. so why don’t I get some money kicked back to me from the government since I did the correct thing and scrimped and saved? Actually I get to help bale out the people that thought they needed $500,000 condos plus a house. Next time.. don’t buy a house or condo before you sell the other one.