I own this home since feb/06. Will I be able to deduct mortgage interest, taxes,maintenance and other expenses to any income I have to report (1099-C)? What about the downpayment I walked away from. In my case I put down 20k. My loan balance is $172K and properties in area are appraising for $172K-$177k. I purchased for $192k. I 've paid about 23K in interest only payments and other expenses in my attempt to try and sell and not ruin my credit. But I'm at the end of my rope. I would like to understand all the financial consequences of doing this "deed in lieu" beside of course ruining my credit. Thanks