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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1058 Grove Street
Summerton, SC 29148
Residential
MLS# 23027962 / Active
Prepare for small town, lake front living at 1058 Grove Street! Situated on .42 acres, complete with a dock and no flood zone, this property is a d...
Reduced -$15,000
3449 Kirkwall Drive
Summerville, SC 29485
Buckshire
Residential
MLS# 23027957 / Active
Welcome to 3449 Kirkwall Dr, a stunning house available for sale! This spacious property features 5 bedrooms and 3 bathrooms, providing ample space...
120 W Hartwick Lane
Goose Creek, SC 29445
Crowfield Plantation
Residential
MLS# 23027938 / Active
Back on Market due to no fault of the seller, buyer financing fell through. This charming 2-story gem, nestled in the fantastic Crowfield neighborh...
85 Cumberland Street UNIT P2
Charleston, SC 29401
French Quarter
Residential
MLS# 23027915 / Active
Experience the pinnacle of opulent downtown living in this fully-furnished, lavish two-story penthouse, seamlessly blending the rich tapestry of hi...
Reduced -$105,000
105 Estes Court
Summerville, SC 29485
White Church Place
Residential
MLS# 23027907 / Active
Welcome to your newly renovated dream home in Summerville, SC! This 3-bed, 2-bath split-level gem offers a modern kitchen with fresh white cabinets...
Reduced -$2,001
6248 Josie Ridge Road
Wadmalaw Island, SC 29487
Martins Point
Residential
MLS# 23027903 / Active
SELLER WANTS OFFERS!! Welcome to this exquisite retreat nestled in the serene landscape of Wadmalaw Island. This charming home offers a peaceful es...
Reduced -$295,000
220 Watersglen Drive
Summerville, SC 29486
Cane Bay Plantation
Residential
MLS# 23027814 / Active
Limited time up to $28k finance incentive with builder's preferred lender and attorney. READY THIS SPRING! This homesite offers a corner lot. Pine ...
Reduced -$7,000
1950 Old Parsonage Road
Charleston, SC 29414
Magnolia Ranch
Residential
MLS# 23027806 / Active
This 1959, 4 Bed 2 Bath home with attached tiny house with shower and bath, sits next to a lot. The purchase price is for both lots. The property i...
191 High Hammock Villas
Seabrook Island, SC 29455
Seabrook Island
Residential
MLS# 23027776 / Active
LOWER LEVEL FLAT in a quaint section of High Hammock Villas, with only 16 units in this section of the regime. Located on the 8th fairway of Ocean ...
Reduced -$20,900
1901 Robertson Boulevard
North Charleston, SC 29406
Oak Grove
Residential
MLS# 23027768 / Active
Nice new construction house recently completed, just off Rivers Avenue in North Charleston. This 3 bedroom/2.5 bath house has a dining room, kitche...
Reduced -$9,000
2808 Seabrook Island Road
Johns Island, SC 29455
Seabrook Island
Residential
MLS# 23027743 / Active
Peacefully situated in the gated, beachfront resort of Seabrook Island, this custom home is a must see! This corner lot is full of towering trees p...
Reduced -$50,000
7750 Montview Road
North Charleston, SC 29418
The Park At Rivers Edge
Residential
MLS# 23027721 / Active
Assumable FHA loan at 2.5%! Inside the gated community at The Park at Rivers Edge, you'll find one of the better townhomes in the entire neighborho...
Reduced -$2,400
49 Church Street
Charleston, SC 29401
South Of Broad
Residential
MLS# 23027687 / Active
This charming Church Street residence lives beautifully both inside and out. The home is set back from the street with a lovely front yard, double ...
Reduced -$300,000
330 Concord Street UNIT 12 A
Charleston, SC 29401
Dockside
Residential
MLS# 23027674 / Active
Stunning, turnkey 12th floor condo on the south side of Dockside. Expansive views of the harbor, Fort Sumter, Sullivan's Island as well as the gorg...
29 Broad Street UNIT B
Charleston, SC 29401
South Of Broad
Residential
MLS# 23027673 / Active
Imagine owning a piece of Charleston history, a seldom-seen opportunity to purchase a portion of the historic McCauley Davis Building. Sitting amid...
1049 Refuge Way
Summerton, SC 29148
Summerton
Residential
MLS# 23027671 / Active
Welcome to Gordon Cove: A new construction, move-in ready community. They have seamlessly blended modern comfort with convenient living. This spraw...
1784 Gordon Road
Summerton, SC 29148
Summerton
Residential
MLS# 23027669 / Active
Welcome to Gordon Cove: A new construction, move-in ready community built by Distinct Builders LLC. They have seamlessly blended modern comfort wit...
31 Berkshire Hall
Kiawah Island, SC 29455
Kiawah Island
Residential
MLS# 23027654 / Active
Located on a quiet tree lined cul-de-sac on the beautiful island of Kiawah. With 4687 SF of living space, 5 bedrooms, 5.5 baths, lovely outdoor spa...
1107 Longpoint Road
Cross, SC 29436
Cross Subd (longpoint)
Residential
MLS# 23027641 / Active
Welcome to your new oasis in the heart of nature! If you are looking for country living away from the hustle and bustle of Charleston; this is the ...
Reduced -$4,000
190 Factors Walk
Summerville, SC 29485
Gahagan
Residential
MLS# 23027522 / Active
Welcome to this gem, just waiting for you to call it home. Situated at the end of a short cul-de-sac, just minutes from downtown Summerville. This ...
Reduced -$4,327
4425 Sea Forest Drive
Kiawah Island, SC 29455
Windswept Villas
Residential
MLS# 23027512 / Active
This oceanfront two-story, two-bedroom corner townhouse is located on the top two floors of Windswept. Filled with sunlight and warm summery colors...
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