{"id":713,"date":"2010-06-01T01:17:00","date_gmt":"2010-06-01T01:17:00","guid":{"rendered":"https:\/\/0c8fb60.netsolhost.com\/en\/?p=713"},"modified":"2022-11-17T03:01:28","modified_gmt":"2022-11-17T03:01:28","slug":"189-recourse-vs-nonrecourse-debt","status":"publish","type":"post","link":"https:\/\/www.usataxhelp.com\/en\/our-tax-blog-at-wwwirstaxtalkcom\/general\/189-recourse-vs-nonrecourse-debt\/","title":{"rendered":"Recourse vs. Nonrecourse Debt"},"content":{"rendered":"\n<p class=\"wp-block-paragraph\"><strong>Recourse vs. Nonrecourse<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">When a debt is canceled by any means (deed in lieu of, foreclosure, short sale,<br>cancellation of debt), the tax impact depends on the type of debt.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Debt for which the borrower is personally liable is &#8220;recourse debt,&#8221; all other debt is &#8220;nonrecourse debt.&#8221;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>RECOURSE<\/strong>&nbsp;debt holds the borrower<strong>&nbsp;personally liable<\/strong>&nbsp;for any unsatisfied amount owed when the property is surrended (by any means).<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">If a lender forecloses on property subject to recourse debt, and cancels the portion in excess of the fair market value (FMV), the canceled part is &#8220;ordinary income from cancellation of indebtedness&#8221;. That figure must be included in gross income unless it qualifies for an exception of exclusion (personal residence, Mortgage Debt Relief Act, bankruptcy or insolvency).<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Additionally taxpayer may realize a gain or loss on the disposition of the property by the difference between the tax basis and the FMV at the time of foreclosure.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>NONRECOURSE<\/strong>&nbsp;debt is satisfied by the surrender of the property regardless of FMV. Borrower is&nbsp;<strong>not personally liable<\/strong>&nbsp;for the debt.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">If nonrecourse debt is abandoned, foreclosed, short sale or repossessed, it is treated as a sale. The usual method to determine gain or loss is used. The balance of the nonrecourse debt at the time of the disposition is treated as the amount realized (in other words you actually sold it for the total debt of the property, not just what a short sale closing document may indicate).<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Recourse vs. Nonrecourse When a debt is canceled by any means (deed in lieu of, foreclosure, short sale,cancellation of debt), the tax impact depends on the type of debt. Debt for which the borrower is personally liable is &#8220;recourse debt,&#8221; all other debt is &#8220;nonrecourse debt.&#8221; RECOURSE&nbsp;debt holds the borrower&nbsp;personally liable&nbsp;for any unsatisfied amount owed [&#8230;]<\/p>\n<p><a class=\"understrap-read-more-link\" href=\"https:\/\/www.usataxhelp.com\/en\/our-tax-blog-at-wwwirstaxtalkcom\/general\/189-recourse-vs-nonrecourse-debt\/\">Read More&#8230;<span class=\"screen-reader-text\"> from Recourse vs. Nonrecourse Debt<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11,14],"tags":[],"class_list":["post-713","post","type-post","status-publish","format-standard","hentry","category-general","category-llc"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v19.10 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Recourse vs. Nonrecourse Debt - USA Tax Help<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.usataxhelp.com\/en\/our-tax-blog-at-wwwirstaxtalkcom\/general\/189-recourse-vs-nonrecourse-debt\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Recourse vs. Nonrecourse Debt - USA Tax Help\" \/>\n<meta property=\"og:description\" content=\"Recourse vs. Nonrecourse When a debt is canceled by any means (deed in lieu of, foreclosure, short sale,cancellation of debt), the tax impact depends on the type of debt. Debt for which the borrower is personally liable is &#8220;recourse debt,&#8221; all other debt is &#8220;nonrecourse debt.&#8221; RECOURSE&nbsp;debt holds the borrower&nbsp;personally liable&nbsp;for any unsatisfied amount owed [...]Read More... from Recourse vs. Nonrecourse Debt\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.usataxhelp.com\/en\/our-tax-blog-at-wwwirstaxtalkcom\/general\/189-recourse-vs-nonrecourse-debt\/\" \/>\n<meta property=\"og:site_name\" content=\"USA Tax Help\" \/>\n<meta property=\"article:published_time\" content=\"2010-06-01T01:17:00+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2022-11-17T03:01:28+00:00\" \/>\n<meta name=\"author\" content=\"LONYOUNG\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"LONYOUNG\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"2 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/www.usataxhelp.com\/en\/our-tax-blog-at-wwwirstaxtalkcom\/general\/189-recourse-vs-nonrecourse-debt\/#article\",\"isPartOf\":{\"@id\":\"https:\/\/www.usataxhelp.com\/en\/our-tax-blog-at-wwwirstaxtalkcom\/general\/189-recourse-vs-nonrecourse-debt\/\"},\"author\":{\"name\":\"LONYOUNG\",\"@id\":\"https:\/\/www.usataxhelp.com\/en\/#\/schema\/person\/42e3184ba509e75d345d3e43f1dff839\"},\"headline\":\"Recourse vs. Nonrecourse Debt\",\"datePublished\":\"2010-06-01T01:17:00+00:00\",\"dateModified\":\"2022-11-17T03:01:28+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/www.usataxhelp.com\/en\/our-tax-blog-at-wwwirstaxtalkcom\/general\/189-recourse-vs-nonrecourse-debt\/\"},\"wordCount\":252,\"publisher\":{\"@id\":\"https:\/\/www.usataxhelp.com\/en\/#organization\"},\"articleSection\":[\"General\",\"LLC\"],\"inLanguage\":\"en-US\"},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.usataxhelp.com\/en\/our-tax-blog-at-wwwirstaxtalkcom\/general\/189-recourse-vs-nonrecourse-debt\/\",\"url\":\"https:\/\/www.usataxhelp.com\/en\/our-tax-blog-at-wwwirstaxtalkcom\/general\/189-recourse-vs-nonrecourse-debt\/\",\"name\":\"Recourse vs. Nonrecourse Debt - USA Tax Help\",\"isPartOf\":{\"@id\":\"https:\/\/www.usataxhelp.com\/en\/#website\"},\"datePublished\":\"2010-06-01T01:17:00+00:00\",\"dateModified\":\"2022-11-17T03:01:28+00:00\",\"breadcrumb\":{\"@id\":\"https:\/\/www.usataxhelp.com\/en\/our-tax-blog-at-wwwirstaxtalkcom\/general\/189-recourse-vs-nonrecourse-debt\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/www.usataxhelp.com\/en\/our-tax-blog-at-wwwirstaxtalkcom\/general\/189-recourse-vs-nonrecourse-debt\/\"]}]},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/www.usataxhelp.com\/en\/our-tax-blog-at-wwwirstaxtalkcom\/general\/189-recourse-vs-nonrecourse-debt\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\/\/www.usataxhelp.com\/en\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Recourse vs. Nonrecourse Debt\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/www.usataxhelp.com\/en\/#website\",\"url\":\"https:\/\/www.usataxhelp.com\/en\/\",\"name\":\"USA Tax Help\",\"description\":\"Young &amp; 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Debt for which the borrower is personally liable is &#8220;recourse debt,&#8221; all other debt is &#8220;nonrecourse debt.&#8221; RECOURSE&nbsp;debt holds the borrower&nbsp;personally liable&nbsp;for any unsatisfied amount owed&hellip;","_links":{"self":[{"href":"https:\/\/www.usataxhelp.com\/en\/wp-json\/wp\/v2\/posts\/713","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.usataxhelp.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.usataxhelp.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.usataxhelp.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.usataxhelp.com\/en\/wp-json\/wp\/v2\/comments?post=713"}],"version-history":[{"count":1,"href":"https:\/\/www.usataxhelp.com\/en\/wp-json\/wp\/v2\/posts\/713\/revisions"}],"predecessor-version":[{"id":714,"href":"https:\/\/www.usataxhelp.com\/en\/wp-json\/wp\/v2\/posts\/713\/revisions\/714"}],"wp:attachment":[{"href":"https:\/\/www.usataxhelp.com\/en\/wp-json\/wp\/v2\/media?parent=713"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.usataxhelp.com\/en\/wp-json\/wp\/v2\/categories?post=713"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.usataxhelp.com\/en\/wp-json\/wp\/v2\/tags?post=713"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}