Q: Can I claim 1099c (received for 2023 taxes) as main home since it was main home in 2014 and amount is from 2014?
In 2014 my ex-husband and I had a mobile home (that was in both names) repossessed off of property that we jointly owned. Just received 1/21/2024 a 1099c for the amount of the mobile home to be filed for 2023 taxes. This was our main home at the time, before divorce, and repossession in 2013-2014. I have since bought a new home. I am trying to figure out how to file on taxes. I have called IRS but did not receive an answer from them. I do not want this to come ba k to haunt me.
A:
Yes, you can still treat the 1099-C debt cancellation for the mobile home in 2014 as exempt from tax under the main home exclusion, even though it is just now being reported on a 2023 1099-C. Here is why:
1) The 1099-C relates to cancellation of debt that occurred in 2014, which is when the mobile home was repossessed while serving as your main home.
2) The main home debt forgiveness exclusion allows up to $2 million of canceled mortgage debt used to buy, build or substantially improve your main home to be exempt from tax. This applies as long as the debt was incurred before January 1, 2018.
3) So despite the 1099-C just being issued now, you meet that requirement because the mobile home loan and repossession happened in 2014 while it was your main home.
4) On your 2023 tax return when reporting this 1099-C amount, you would complete IRS Form 982 to claim the debt cancellation as exempt due to main home exclusion from prior years. This prevents the canceled debt from being taxed.
So in summary - yes, the timing of the 1099-C issuance does not prevent you from taking the main home exclusion on your 2023 taxes. It relates to prior year debt on your then main home.
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