Gastonia, NC asked in Tax Law for North Carolina

Q: are you responsible for paying taxes on home not in your name and you never lived in. Husband who owned it died.

I remarried. My husband had a home that was in his first wife's name she was deceased. After our marriage he was in severe accident and foreclosure happened on home. His name was never on deed and I never lived in the house or was not connected to it in anyway. Foreclosure notice went to his wife. Apparently bank did not know she was deceased. He never put house in his name. Now he is deceased and the state of nc is wanting me to pay taxes on the foreclosed house as income.

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1 Lawyer Answer
James Richard Yandle
James Richard Yandle
  • Tax Law Lawyer
  • Charlotte, NC
  • Licensed in North Carolina

A: I assume you are talking about state INCOME tax (not local county property tax, or other type of tax). And, i'm guessing the issue arose from a 1099-C Cancellation of Debt, to the now deceased husband, from the foreclosure, (tax year 2016, based on timing?). Further, I'm guessing you filed a joint return for that year with the decedent.

The likely route to resolve such a matter, at this stage, is seek a competent, professional income tax return preparer, preferably a CPA, and file professionally prepared amended federal and state income tax returns for that year. The cancellation of debt income is probably excludable (usually is), but you'll need to properly account for both the cancellation of debt income, AND the related exclusion, by means of a properly amended prepared return. At this stage, it appears more of a (amended) return preparation issue than a legal depute issue- but a consultation with a competent preparer re: amending returns is a good first step.

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