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Gain or loss on the foreclosure of your house usually is capital gain or loss. However, a loss on the foreclosure of your residence is not deductible. Capital gains are reported on Form 1040, Schedule D (PDF). If, however, the gain on the foreclosure of your residence is excluded under I.R.C. 121, you are not required to report the gain on your return. References: Publication 523, Selling Your Home Publication 537, Installment Sales Publication 544, Sales and Other Dispositions of Assets Publication 908, Bankruptcy Tax Guide Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness Form 1040, U.S. Individual Income Tax Return Form 1040, Schedule D, Capital Gains and Losses Form 1099-A, Acquisition or Abandonment of Secured Property Form 1099-C, Cancellation of Debt Form 4797, Sales of Business Property -
This is NOT the time to 'do it yourself'! You need to see a qualified tax professional. Look for an Enrolled Agent in the yellow pages.
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