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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147 Darcy Avenue
Goose Creek, SC 29445
Persimmon Hill Townhouses
Residential
MLS# 26019342 / Active
Welcome home to 147 Darcy Ave. Located in highly desirable Persimmon Hill Townhouses. Conveniently located in the heart of Goose Creek. This Tradit...
105 Edisto Crossing Court
Ridgeville, SC 29472
Timothy Lakes
Residential
MLS# 26019340 / Active
Welcome to the farmhouse you`ve been waiting for--where timeless charm, thoughtful design, and everyday functionality come together on nearly half ...
1466 Hollenberg Lane
Mount Pleasant, SC 29466
Carolina Park
Residential
MLS# 26019337 / Active
Welcome to 1466 Hollenberg Lane, an exceptional residence nestled in the heart of the highly sought-after Carolina Park community. Perfectly positi...
232 Summer Tanager Drive
Ravenel, SC 29470
Homecoming
Residential
MLS# 26019336 / Active
The Devin - 3BR / 3.5BA - features open main living areas and owner`s suite on main! Well-appointed kitchen, and dingin, large owner`s suite with e...
1543 Terns Nest Road
Charleston, SC 29412
Riverfront
Residential
MLS# 26019333 / Active
Rare deepwater opportunity in the heart of James Island! Perfectly positioned on true deep water, 1543 Terns Nest Road offers the coastal Charlesto...
2110 Longhorn Lane
Summerville, SC 29485
Summers Corner
Residential
MLS# 26019331 / Active
Why wait for new construction when you can move right into this beautifully updated home in Sweetgrass at Summers Corner? Offering the look and fee...
122 Bramwell Drive
Summerville, SC 29485
Briarwood
Residential
MLS# 26019330 / Active
New Construction Home in Beautiful Summerville, SC in Dorchester District Two School Zone! Nestled on a spacious .31 acre lot in the Briarwood subd...
1736 Sulgrave Road
Charleston, SC 29414
Forest Lakes
Residential
MLS# 26019329 / Active
NO HOA! Located in the well established Forest Lakes subdivision. This home has had extensive renovations over the past few years. Close to 1/2 an ...
1203 Valley Drive
Hanahan, SC 29410
Berkeley Hills
Residential
MLS# 26019328 / Active
Welcome to 1203 Valley Drive, a beautifully renovated brick ranch in the heart of Hanahan offering the perfect blend of timeless Lowcountry charm a...
40 41st Avenue UNIT E15
Isle of Palms, SC 29451
Wild Dunes
Residential
MLS# 26019327 / Active
Own a premier boat slip in the desirable Wild Dunes Yacht Harbor on the Isle of Palms. Dock E15 is a 40-foot slip with a 5-foot overhang, accommoda...
93 Romney Street
Charleston, SC 29403
Romney Village
Residential
MLS# 26019324 / Active
Cottage in the upcoming ``Lowline`` corridor; one of the upper peninsula`s sought after neighborhoods with nearby restaurants and the future planne...
3 Barnacle Row
Isle of Palms, SC 29451
Wild Dunes
Residential
MLS# 26019323 / Active
Embrace the ultimate Lowcountry coastal lifestyle with this classic beach cottage tucked away in the prestigious, gated resort community of Wild Du...
203 Whitesville Road
Moncks Corner, SC 29461
Residential
MLS# 26019321 / Active
Welcome home to 203 Whitesville Road, Moncks Corner, SC! This beautiful 4-bedroom, 2-bath home offers the perfect blend of comfort, space, and priv...
102 Helen Court
Ladson, SC 29456
Jamison Terrace
Residential
MLS# 26019318 / Active
New Roof. New HVAC. This handyman special has the expensive work already done. Home needs updating as well as some subfloor work. Home has large fe...
148 Rosefield Court
Summerville, SC 29485
Palmetto Reach
Residential
Welcome home to this beautifully designed townhome, where an open-concept floor plan creates a spacious and inviting atmosphere that`s perfect for ...
407 Thoroughbred Drive
Moncks Corner, SC 29461
Steeplechase
Residential
MLS# 26019314 / Active
Room to spread out at 407 Thoroughbred Dr! With 2,834 square feet, this two-story home offers one of the most flexible layouts you`ll find at this ...
974 Arrowwood Way
Summerville, SC 29485
Summers Corner
Residential
MLS# 26019313 / Active
Welcome to 974 Arrowwood Way, a beautifully crafted home in the highly sought-after Summers Corner community, where Lowcountry charm meets modern, ...
115 Wateree Drive
Santee, SC 29142
Santee Cooper Resort
Residential
MLS# 26019310 / Active
Luxury meets lakeside living in this fully custom new construction home located in the prestigious Santee Cooper Resort, a gated golf and lake comm...
240 Ole Sunshines Trail
Huger, SC 29450
Huger
Residential
MLS# 26019309 / Active
Welcome to 240 Ole Sunshines Trail, a 5-bed, 4.5-bath home (Plus a full 1 bed/1 bath over garage) A welcoming front porch leads into the foyer, for...
117 Pocket Bend Circle
Summerville, SC 29486
Nexton
Residential
MLS# 26019308 / Active
Experience low-maintenance living with one of the best locations in Midtown at Nexton. Overlooking a beautiful park and just a short walk or golf c...
907 Reserve Way
Summerville, SC 29485
Regents Green
Residential
MLS# 26019305 / Active
Don`t miss this beautifully renovated pond lot townhome in the highly sought-after Kings Grant community! Move-in ready and updated from top to bot...
Reduced -$500
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