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For automated calculations page down, fill in the blanks, and calculate.

Thanks to the new 2007 Mortgage Forgiveness Debt Relief, you don't have to mess with complicated
capital gain and ordinary income tax calculations.  For the next three years, the debt forgiveness of your residential mortgage will not be taxable as it used to be in the past. This new income tax resolution has made it more flexible for tax payers to be able to avoid capital gain tax and ordinary income tax.
 

Table 1-1. Worksheet for Foreclosures and Repossessions

Part 1. Figure your ordinary income from the cancelation of debt upon foreclosure or repossession.
Complete this part only if you were personally liable for the debt.

1.-Enter the amount of outstanding debt immediately before the transfer of property reduced  by any amount for which you remain personally liable

 

2. Enter the fair market value of the transferred property

 

3. Ordinary income from the cancelation of debt upon foreclosure or repossession.*
Subtract line 2 from line. If less than zero, enter zero. Next, go to Part 2

  


Part 2. Figure your gain or loss from foreclosure or repossession. Report this income on
your return unless certain exceptions or exclusions apply. See Chapter 1, of form 4681

4. If you completed Part 1, enter the smaller of line 1 or 2. If you did not complete Part 1,
enter the amount of outstanding debt immediately before the transfer of property

 

5. Enter any proceeds you received from the foreclosure sale

 

6. Add line 4 and line 5

 

7. Enter the adjusted basis of the transferred property

 

8. Gain or loss from foreclosure or repossession. Subtract line 7 from line 6.

 

TIP: The income may not be taxable. See Chapter 1, Canceled Debts, for more details.

If your result is negative, it’s a loss and is not a deductible loss on personal property. If you have a gain. This gain may be excluded from you income if all the tests are met for your home to qualify as your main residence or you had to sell your home due to unforeseen reasons such as unemployment, divorce, or health cause. Please call for details.