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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7 Photos 837 Redbud Lane Summerville, SC 29486

837 Redbud Lane
Summerville, SC 29486
Cane Bay Plantation
Residential

MLS# 20002183 / Active
3 br, 2 ba, 1 Half Bath, 1640 Sqft

Well-maintained home in Lindera Preserve. Like new! Home features upgraded cabinets, stainless steel appliances, vaulted ceilings. Deluxe owner's... 

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$245,000
Provided courtesy of Exit Realty Lowcountry Group
6 Photos 247 Grand Oaks Drive Ladson, SC 29456

247 Grand Oaks Drive
Ladson, SC 29456
Grand Oaks Preserve
Residential

MLS# 20001955 / Active
3 br, 2 ba, 1 Half Bath, 1685 Sqft

SHORT SALE OPPORTUNITY!!! QUIET AREA AND LOTS OF ROOM IN THIS TOWNHOUSE. SHORT WALK TO POOL AND TO ENJOY THE DAY OUT WALKING IN THE NEIGHBORHOOD. ... 

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$126,500
Provided courtesy of Metro Realty Group LLC
37 Photos 1694 Wayah Drive Charleston, SC 29414

1694 Wayah Drive
Charleston, SC 29414
Providence Commons
Residential

MLS# 20001662 / Active
4 br, 3 ba, 2362 Sqft

This home is located on a quiet street in the highly desired Providence Commons Subdivision. Step into the home from the covered front porch and no... 

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$265,000
Provided courtesy of BHHS Southern Coast Real Estate
25 Photos 137 Lindera Preserve Boulevard Summerville, SC 29483

137 Lindera Preserve Boulevard
Summerville, SC 29483
Cane Bay Plantation
Residential

MLS# 20001194 / Active
4 br, 3 ba, 3565 Sqft

This gorgeous home has the ''Everything Included'' feel. It's located on a great homesite with a pond view. Step inside to a wide foyer, a front b... 

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$345,841
Provided courtesy of Realty One Group Coastal
1 Photos 11 Reid Street Charleston, SC 29403

11 Reid Street
Charleston, SC 29403
Eastside
Residential

MLS# 20000767 / Active
5 br, 3 ba, 2108 Sqft

Possible Short Sale!! Ready for its next owner!! Great Downtown Charleston home just off Easy Bay St. Come See!! 

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$350,000
Provided courtesy of Keller Williams Realty Charleston
25 Photos 453 Foxbank Plantation Boulevard Moncks Corner, SC 29461

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

MLS# 20000360 / Active
3 br, 2 ba, 1 Half Bath, 2016 Sqft

This 3 bedroom/2.5 bathroom home is a great opportunity in desirable Foxbank Plantation. Upon entering, you will notice the open concept living spa... 

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$260,000
Provided courtesy of Palm Realty Group, llc
15 Photos 247 3-A Stefan Drive Charleston, SC 29412

247 3-A Stefan Drive
Charleston, SC 29412
Riverland Place
Residential

MLS# 19032868 / Active
2 br, 1 ba, 1 Half Bath, 1020 Sqft

 

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$185,000
Provided courtesy of Marshland Realty
15 Photos 120 Longford Drive Summerville, SC 29483

120 Longford Drive
Summerville, SC 29483
Wentworth Hall
Residential

MLS# 19032400 / Active
3 br, 2 ba, 1 Half Bath, 1720 Sqft

This charming gem is nestled in Wentworth Hall and waiting for you to call home if you are looking for an affordable home located in Dorchester Dis... 

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$220,000
Provided courtesy of Keller Williams Realty Charleston
10 Photos 1232 Chicorie Way Charleston, SC 29412

1232 Chicorie Way
Charleston, SC 29412
Quail Run
Residential

MLS# 19028785 / Active
3 br, 2 ba, 1236 Sqft

Own a home in Quail Run in James Island! Lots of potential in this 3 bedroom home with separate dining, kitchen and family room. New roof 2015. T... 

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$275,000
Reduced -$12,000
Provided courtesy of Charleston Homes
45 Photos 100 Wachovia Court Summerville, SC 29485

100 Wachovia Court
Summerville, SC 29485
Ashley Forest
Residential

MLS# 19028040 / Active
5 br, 4 ba, 3197 Sqft

This custom built brick home is located in Ashley Forest neighborhood. Ashley Forest is conveniently located between Dorchester Road and Bacons Br... 

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$426,000
Reduced -$14,000
Provided courtesy of Brand Name Real Estate
22 Photos 8612 Woodland Walk North Charleston, SC 29420

8612 Woodland Walk
North Charleston, SC 29420
Coosaw Creek Country Club
Residential

MLS# 19024706 / Active
3 br, 2 ba, 1 Half Bath, 2300 Sqft

Lovely home in Coosaw Creek that needs some updating but what canvas to work with. Step onto the front porch and you come to a large full glass w... 

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$324,500
Reduced -$10,400
Provided courtesy of AgentOwned Realty Co. Premier Group, Inc.
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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$1,295,000
Provided courtesy of Carolina One Real Estate
17 Photos 164 Palm Cove Way Mount Pleasant, SC 29466

164 Palm Cove Way
Mount Pleasant, SC 29466
Dunes West
Residential

MLS# 18027640 / Active
2 br, 2 ba, 1 Half Bath, 2175 Sqft

This exquisitely upgraded townhome, located in the exclusive Dunes West gated community has MARSH VIEWS from nearly every window making it a privat... 

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$310,500
Reduced -$10,000
Provided courtesy of Coldwell Banker Residential Brokerage
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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 01-27-2020 1:01 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 2020 Charleston Trident Multiple Listing Service, Inc. All rights reserved.
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Multiple Listing Service

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Relocation Notifications

Leading Real Estate Companies of the World will be notified of your home’s availability for sale. Composed of 550 firms, 4,600 offices and 140,000 sales associates in over 30 countries, this group of successful real estate agencies send referrals daily.

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Multiple Websites

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