If you are considering a real estate short sale of your home, you should be aware that you might receive a form 1099-C for the amount of the lender's losses.
This is considered loan forgiveness in the eyes of the IRS. If you have other assets such as savings and you are not insolvent, you may end up being responsible to pay ordinary taxes on the amount of the 1099-C.
If you settle a debt with a creditor for less than the full amount owed, you may be required to report this forgiven debt as regular income, with certain important exceptions.
The forgiven debts include money owed after foreclosure or property repossession or credit accounts that you don't pay.
There are exceptions noted below:
If a lender forgives or writes off $600 or more of a debt's principal (the amount not including interest or fees) must send you and the IRS a Form 1099-C at the end of the year. When you file your tax return for the tax year in which your debt was written off, the IRS will require that you report the amount on the form as income.
Fortunately, the Obama administration passed a law stating that if you are short selling your primary residence, you may be exempt from paying taxes even if a 1099 is submitted to the IRS by the lender.
While you may not have received this form from the creditor, the creditor may have submitted one to the IRS anyway. If you don’t list the income on your tax return and the IRS has the information of the transaction on file, you could get a tax bill or, worse, an audit notice. This could end up costing you more than just the original tax bill.
There are several exceptions stated in the Internal Revenue Code. For example, you do not have to report the income on your tax return if the write off of the debt is intended as a gift, you discharge the debt in bankruptcy, or you were insolvent before the creditor agreed to settle or write off the debt. You should consult a qualified tax and legal counsel to see if these circumstances apply.
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115 Post Mill Drive
Summerville, SC 29485
Summers Corner
Residential
MLS# 24010271 / Active
This home is estimated for a May 2024 completion. This two-story home features an elegant double-height entryway that flows to the open layout amon...
244 Tupelo Lake Drive
Summerville, SC 29486
Cane Bay Plantation
Residential
MLS# 24010270 / Active
Welcome home to 244 Tupelo Lake Drive, nestled in the serene Four Seasons community, where lakefront living meets comfort and elegance. This popula...
1907 Longhorn Lane
Summerville, SC 29485
Summers Corner
Residential
MLS# 24010268 / Active
*Estimated for a May completion* This spacious two-story home features an open layout among the dining room, kitchen and family room with access to...
418 Turnstone Street
Mount Pleasant, SC 29464
Tidal Walk
Residential
MLS# 24010267 / Active
Nestled on the most sought-after pond-front site within the serene neighborhood of Tidal Walk, this splendid single-family home in the heart of Mou...
336 Dahlia Row Drive
Summerville, SC 29486
Nexton
Residential
MLS# 24010266 / Active
This newly completed home is the very popular Hallmark floor plan built against a very tall berm with very private homesite. Many upgrades such as ...
1471 Woodview Lane
Charleston, SC 29412
Westchester
Residential
MLS# 24010265 / Active
LOCATION ,LOCATION, Welcome home! This fully renovated split-level gem offers 3 bedrooms , 2 1/2 baths, an expansive office space and a generous si...
509 Linden Circle
Charleston, SC 29407
Parkwood Estates
Residential
MLS# 24010264 / Active
Welcome to 509 Linden Circle! This beautifully renovatedproperty is situated in the heart of West Ashley in desirable Parkwood Estates,conveniently...
294 Driftwood Lane
Edisto Island, SC 29438
Ocean Ridge
Residential
MLS# 24010263 / Active
Rare Opportunity to Own a 2BR/2BA Fairway Watch Villa in Edisto Beach, SC! This fully furnished unique villa offers a 1/13 partnership share, with ...
154 Longford Drive
Summerville, SC 29483
Wentworth Hall
Residential
MLS# 24010262 / Active
Welcome Home to 154 Longford Drive. Located in the highly sought after DD2 School District and minutes from Pinewood Prep in Beautiful Summerville,...
316 McClain Street
Charleston, SC 29407
Wappoo Shores
Residential
MLS# 24010261 / Active
Here's your chance to own your slice of Mediterranean paradise in the heart of Charleston's idyllic Wappoo Shores neighborhood. Nestled on a sprawl...
1444 Madison Court
Mount Pleasant, SC 29466
Brickyard Plantation
Residential
MLS# 24010260 / Active
This marquis deepwater estate is located in the heart of Mount Pleasant, one of the Lowcountry's most desirable areas. in 2012, this incredible hom...
423 Doane Way
Wando, SC 29492
Beresford Commons
Residential
MLS# 24010259 / Active
End Unit with a pond view! Actively operated as an STR with 78% booking occupancy, high dollar daily rate and solid reviews on all platforms- perfe...
3679 Goodwater Street
Mount Pleasant, SC 29466
Carolina Park
Residential
MLS# 24010258 / Active
Welcome to this meticulously customized masterpiece of a home, a testament to the craftsmanship of its owner - a Lowcountry home builder. Nestled i...
306 Waterlily Way
Summerville, SC 29486
Cane Bay Plantation
Residential
MLS# 24010257 / Active
55+ living at its best! This well-maintained single level 2 bedroom, 2 bath home with French door office and sunroom gives you all the space you're...
1404 Dune Loft Villas
Seabrook Island, SC 29455
Seabrook Island
Residential
MLS# 24010255 / Active
Welcome to your new island retreat. Nestled among the natural splendor of Seabrook Island on a tranquil marsh, this cottage exudes coastal charm. Y...
6006 Wild Azalea Road
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The Ponds
Residential
MLS# 24010254 / Active
Welcome home to 6006 Wild Azalea Rd! Nestled in the highly desirable Cresswind subsection of The Ponds, this impeccable home has so much to offer. ...
45 Sycamore Avenue UNIT #316
Charleston, SC 29407
Residential
MLS# 24010253 / Active
Welcome to this inviting and spacious first-floor condo, offering comfort, convenience, and scenic views in every corner. This charming 2-bedroom, ...
45 Lighthouse Drive
Goose Creek, SC 29445
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Residential
203 W Poplar Street
Charleston, SC 29403
Wagener Terrace
Residential
MLS# 24010249 / Active
Discover your dream 4-bedroom haven nestled in sought-after Wagener Terrace, boasting serenity on a tranquil street, adjacent to a cherished local ...
28 Clearblue Lp
Summerville, SC 29486
Nexton
Residential
MLS# 24010245 / Active
Back by popular demand, Saussy Burbank's Bayberry floor plan is a Nexton favorite. In Nexton Midtown we say ''life happens on the porch'' and this ...
3557 Galaxy Road
Ladson, SC 29456
Paddock Pointe
Residential
MLS# 24010244 / Active
Welcome to your new home in the heart of convenience at Paddock Pointe! This charming residence, strategically placed near the entrance, boasts not...
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