Repossessions, foreclosures, your taxes.

[moneysense]

Did you know that if you house is foreclosed on, or you car or truck is repossessed, that in some cases either or both can be considered taxable income when this happens? And, being considered as such can be added to what you will owe taxes on.

Congress has enacted some exclusions on foreclosures, but they arent automatic, they have to be asked for. To do that you need to file Form 982 Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment), and this is one form that even tax preparers arent too familiar with, plus its pretty complicated.