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.

 

 

Modify Search Criteria
Displaying results 1-3 of 3
14 Photos 8035 McKayla Road Summerville, SC 29483

8035 McKayla Road
Summerville, SC 29483
Myers Mill
Residential

MLS# 21005364 / Active
4 br, 2 ba, 1 Half Bath, 2577 Sqft

If you know Myers Mill, then you already know how amazing this community is and how desirable the location, neighborhood and lifestyle is to so man... 

More Details

$295,000
Provided courtesy of AgentOwned Premiere Group
18 Photos 7637 Crossgate Boulevard North Charleston, SC 29420

7637 Crossgate Boulevard
North Charleston, SC 29420
Crossgate
Residential

MLS# 21004533 / Active
3 br, 1 ba, 1 Half Bath, 1344 Sqft

*We are currently negotiating an offer acceptance*Perfect investment opportunity! This 3 bed 1.5 home is ideal for an investor. The garage was conv... 

More Details

$85,000
Provided courtesy of RE/MAX Inspire
1 Photos 11 Reid Street Charleston, SC 29403

11 Reid Street
Charleston, SC 29403
Eastside
Residential

MLS# 20000767 / Active
4 br, 1 ba, 1 Half Bath, 2108 Sqft

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

More Details

$299,999
Provided courtesy of Keller Williams Realty Charleston
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 03-01-2021 11:00 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 2021 Charleston Trident Multiple Listing Service, Inc. All rights reserved.
Commercial Sale/Lease: Copyright 2021 South Carolina commercial MLS, Inc. All rights reserved. Last updated on 03-01-2021 11:00 PM EST est.

Any images related to data from the MLS is the sole property of the MLS and not the responsibility of the owner of this website.


This real estate website and IDX data is hosted by Dynamic IDX, LLC

Nat Wallen’s Charleston videos attract more customers.


Sell your home with the market leader.

Hey there, thanks for reaching out!
Are schools important to you?
When do you need us?
Your general price point?
Don’t worry... this is not set in stone :)
Want to add a note?
EXPLORE CHARLESTON ON YOUR OWN
Call: 843.708.4488
Thanks for wanting the GPS tour!
Are schools important to you?
When do you need us?
Your general price point?
Don’t worry... this is not set in stone :)
Want to add a note?

Private Message

Private Message