Foreclosure - Borrower's Worksheet

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This tax worksheet determines the borrower’s tax consequences when a property is foreclosed.

See Publication 4681 for further details and the Cancellation of Debt - Insolvency tax worksheet if cancelled debt can be excluded from income.


  1. Recourse debt is debt for which the borrower is personally liable.
  2. Nonrecourse debt is debt for which the borrower is not personally liable for repaying, even if the fair market value of the property securing the debt is less than the amount of outstanding debt.
  3. This income may not be taxable. See Code Section 108 for exceptions to cancellation of debt income.
  4. Loss from the sale of personal-use property is nondeductible.

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