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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37 Photos 5452 Clairmont Lane North Charleston, SC 29420

5452 Clairmont Lane
North Charleston, SC 29420
Cedar Grove
Residential

MLS# 19025667 / Active
4 br, 2 ba, 1 Half Bath, 2477 Sqft

Located in Cedar Grove, you will be close to schools, shopping, and restaurants! NEW CARPET!! Walking in you are greeted by a cozy foyer, hardwood ... 

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$305,000
Reduced -$15,000
Provided courtesy of RE/MAX Alliance
22 Photos 211 Barshay Drive Summerville, SC 29483

211 Barshay Drive
Summerville, SC 29483
Flowertown
Residential

MLS# 19024846 / Active
3 br, 1 ba, 1025 Sqft

Minutes from downtown Summerville, this home has a new roof, new AC installed 2017, new flooring and fresh paint. No HOA and Dorchester County Sch... 

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$135,000
Reduced -$3,000
Provided courtesy of Charleston Homes
46 Photos 35 Eastlake Road Mount Pleasant, SC 29464

35 Eastlake Road
Mount Pleasant, SC 29464
Ion
Residential

MLS# 19024548 / Active
4 br, 4 ba, 2 Half Bath, 5665 Sqft

One of a kind lakefront home available in the prestigious I'On community of Mount Pleasant. Located just minutes to downtown shopping, walking dis... 

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$1,795,000
Provided courtesy of Radekopf And Associates
26 Photos 1132 Huger Street Moncks Corner, SC 29461

1132 Huger Street
Moncks Corner, SC 29461
Limerick Woods
Residential

MLS# 19023773 / Active
3 br, 2 ba, 1205 Sqft

This beautiful 3/2 with large 2 car garage ranch home situated in the heart of Moncks Corner has so much to offer! As you pull in to this extremely... 

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$199,500
Provided courtesy of EXP Realty LLC
18 Photos 1221 Valley Forge Drive Charleston, SC 29412

1221 Valley Forge Drive
Charleston, SC 29412
Whitehouse Plantation
Residential

MLS# 19023427 / Active
3 br, 2 ba, 1324 Sqft

This centrally-located, 2-story townhouse on James Island features a versatile, open floorplan and lots of features to love! From the cathedral cei... 

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$216,500
Increase +$21,500
Provided courtesy of RE/MAX Alliance
32 Photos 163 Hickory Ridge Way Summerville, SC 29483

163 Hickory Ridge Way
Summerville, SC 29483
Hickory Ridge
Residential

MLS# 19022904 / Active
5 br, 2 ba, 1 Half Bath, 2658 Sqft

** NOW AVAILABLE *** GORGEOUS TURNKEY ONE OWNER HOME IN A HIGH DEMAND AREA AND PRICED TO SELL! OPPORTUNITIES LIKE THIS DONT COME AROUND OFTEN! *** ... 

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$260,000
Reduced -$10,000
Provided courtesy of Fred Holland Realty
106 Photos 2356 Darts Cove Way Mount Pleasant, SC 29466

2356 Darts Cove Way
Mount Pleasant, SC 29466
Dunes West
Residential

MLS# 19022737 / Active
6 br, 5 ba, 2 Half Bath, 6417 Sqft

** LUXURIOUS HOME DESIGNED FOR INDOOR/OUTDOOR ENTERTAINMENT ON PRIME LOT IN DUNES WEST. ** WATER VIEWS OF WAGNER CREEK FROM NEARLY EVERY ROOM WITH ... 

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$1,395,000
Reduced -$80,000
Provided courtesy of Carolina One Real Estate
43 Photos 103 Ballard Lane Santee, SC 29142

103 Ballard Lane
Santee, SC 29142
Ballards Pointe II
Residential

MLS# 19018682 / Active
2 br, 2 ba, 1298 Sqft

''APPROVED SHORT SALE'' Have you been dreaming of a vacation home on the water? This well cared for condo on Churchill creek just might be the perf... 

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$115,000
Reduced -$14,900
Provided courtesy of Carolina One Real Estate
32 Photos 453 Foxbank Plantation Boulevard Moncks Corner, SC 29461

453 Foxbank Plantation Boulevard
Moncks Corner, SC 29461
Foxbank Plantation
Residential

MLS# 19010000 / Active
3 br, 2 ba, 1 Half Bath, 2016 Sqft

Welcome to Foxbank Plantation. This two-story home features an open living space with fireplace and separate flex room/dining room. The kitchen boa... 

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$233,000
Reduced -$12,000
Provided courtesy of RE/MAX Cornerstone Realty
34 Photos 1818 Hockley Boulevard Charleston, SC 29414

1818 Hockley Boulevard
Charleston, SC 29414
Carolina Bay
Residential

MLS# 18022315 / Active
4 br, 3 ba, 2019 Sqft

PREAPPROVED SHORT SALE on this 4 bedroom, 3 full bath home featuring hardwood floors, granite countertops, and is located on a corner lot with a la... 

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$320,000
Increase +$20,000
Provided courtesy of Carolina One Real Estate
30 Photos 5804 Palmetto Drive Isle Of Palms, SC 29451

5804 Palmetto Drive
Isle Of Palms, SC 29451
Wild Dunes
Residential

MLS# 16012207 / Active
2 br, 2 ba, 1231 Sqft

POSSIBLE SHORT SALE! !!!FURNISHED END UNIT WITH GREAT RENTAL HISTORY. THERE IS A WRAP AROUND PRIVATE BALCONY THAT HAS VIEWS OF THE POND AND COURTY... 

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$465,000
Reduced -$10,000
Provided courtesy of Carroll Realty
Residential, Land, Other Disclaimer:

Broker Reciprocity The data relating to real estate for sale on this web site comes in part from the Broker ReciprocitySM Program of the Charleston Trident Multiple Listing Service. Real estate listings held by brokerage firms other than Carolina One Real Estate are marked with the Broker ReciprocitySM logo or the Broker ReciprocitySM thumbnail logo (a little black house) and detailed information about them includes the name of the listing brokers. Last updated on 09-14-2019 11:01 PM EST . The broker providing these data believes them to be correct, but advises interested parties to confirm them before relying on them in a purchase decision. Copyright 2019 Charleston Trident Multiple Listing Service, Inc. All rights reserved.
Commercial Sale/Lease: Copyright 2019 South Carolina commercial MLS, Inc. All rights reserved. Last updated on 09-14-2019 11:01 PM EST est.

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