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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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...
447 Duskywing Drive
Goose Creek, SC 29445
Landings At Montague
Residential
MLS# 23027488 / Active
Bristol Floorplan by Eastwood Homes! This home offers a foyer with a custom built in bench with cubbies & hooks for all your everyday belongings! K...
Reduced -$3,560
441 Duskywing Drive
Goose Creek, SC 29445
Landings At Montague
Residential
MLS# 23027478 / Active
Finished-Beautiful, open & inviting Franklin townhome built by Eastwood Homes. Upon walking in - you are greeted with a foyer, also including a coa...
Reduced -$3,930
15 Allway Street
Charleston, SC 29403
Residential
MLS# 23027442 / Active
RARE FIND OPPORTUNITY IN THE WESTSIDE NEAR MUSC. POTENTIAL TO SUBDIVIDE AND CREATE AN EXTRA LOT + DUPLEX! This DUPLEX needs the love and creativity...
Reduced -$8,000
3 Bee Street
Charleston, SC 29403
Cannonborough-Elliotborough
Residential
MLS# 23027437 / Active
This renovated historic home offers a unique combination of old-world charm and modern convenience. The 2021 studs out renovation completely transf...
Reduced -$50,000
201 Hill Street
Walterboro, SC 29488
Peurifoy Terrace
Residential
MLS# 23027428 / Active
Craftsman style house on a corner lot - 2900 SF, 3 bedrooms and 3 FULL baths, eat-in kitchen, living room with fireplace and built-in bookshelves, ...
Reduced -$10,000
802 Neosho Court
Moncks Corner, SC 29461
Spring Grove Plantation
Residential
Welcome to your new 5-bedroom, 3-bathroom haven in the tranquil Spring Grove Plantation community of Moncks Corner. This traditional single-family ...
Reduced -$4,000
129 Summerwind Drive
Summerville, SC 29486
Cane Bay Plantation
Residential
MLS# 23027277 / Active
*** Proposed construction. New Community offering a fresh alternative for buyers looking to 'Right Size' their home w/a low maintenance lifestyle. ...
Increase +$45,890
1880 Andell Bluff Boulevard UNIT I-8
Seabrook Island, SC 29455
Bohicket Marina
Residential
MLS# 23027243 / Active
Beautiful sunsets, restaurants, shops, amenities and events offer something for boaters, family and friends. Bohicket Marina is a short distance to...
Reduced -$500
3820 Gnarled Oaks Lane
Johns Island, SC 29455
Briars Creek
Residential
MLS# 23027214 / Active
New Construction in Charleston's most exclusive private golf course community, Briars Creek. 3820 Gnarled Oaks Lane is a 6 bedroom/5.5 bathroom/5,0...
Increase +$500
40 Lagoon Villas Share 2
Isle of Palms, SC 29451
Wild Dunes
Residential
MLS# 23027206 / Active
Welcome to one of the best values in fractional ownership in the Charleston area. Enjoy 8+ weeks per year in Wild Dunes Resort at Lagoon Villas. Pe...
Increase +$50
40 Lagoon Villas Share 1
Isle of Palms, SC 29451
Wild Dunes
Residential
MLS# 23027205 / Active
Welcome to one of the best values in fractional ownership in the Charleston area. Enjoy 8+ weeks per year in Wild Dunes Resort at Lagoon Villas. Pe...
Reduced -$25
221 Wild Strawberry Lane
Moncks Corner, SC 29461
Carolina Groves
Residential
MLS# 23027153 / Active
Limited time up to $25k finance incentive with builder's preferred lender and attorney. MOVE-IN READY! Carolina Groves in Moncks Corner offers reso...
Increase +$2,665
217 Wild Strawberry Lane
Moncks Corner, SC 29461
Carolina Groves
Residential
MLS# 23027152 / Active
Limited time up to $27k finance incentive with builder's preferred lender and attorney. Welcome to Carolina Groves, located in tranquil Moncks Corn...
Reduced -$7,075
222 Wild Strawberry Lane
Moncks Corner, SC 29461
Carolina Groves
Residential
MLS# 23027150 / Active
Limited time up to $26k finance incentive with builder's preferred lender and attorney. Welcome to Carolina Groves, located in tranquil Moncks Corn...
Reduced -$7,075
220 Wild Strawberry Lane
Moncks Corner, SC 29461
Carolina Groves
Residential
MLS# 23027146 / Active
Limited time up to $25k finance incentive with builder's preferred lender and attorney. Ready Now! Carolina Groves in Moncks Corner offers resort s...
Reduced -$7,335
130 River Landing Drive UNIT #7220
Charleston, SC 29492
Daniel Island
Residential
MLS# 23027107 / Active
Location Location! Daniel Island resort living at its finest. Awesome light filled updated second floor one bed one bath condo with new LVP floors ...
1514 Lauren Dey Way
Mount Pleasant, SC 29464
The Oaks Marsh View
Residential
MLS# 23027094 / Active
Welcome to 1514 Lauren Dey Way, a stunning elevated house nestled on a quiet drive in The Oaks Marsh View in Mount Pleasant, SC. Built in 2017 by J...
200 Dunmeyer Hill Road
Summerville, SC 29485
Dunmeyer Oaks
Residential
MLS# 23027051 / Active
This is a double wide mobile home in need of repair. Active roof leaks and HVAC is not working. It is being sold strictly as is. Seller has no mean...
495 Lake Ridge Boulevard
Summerville, SC 29486
Cane Bay Plantation
Residential
MLS# 23027035 / Active
Pine Hills in Cane Bay, Summerville, South Carolina, offers a serene suburban lifestyle. Nestled amidst lush landscapes, it features elegant homes,...
Increase +$1,975
9875 Jamison Road
Summerville, SC 29485
Residential
MLS# 23027029 / Active
MAKE AN OFFER! So many possibilities. A venue, a fix me upper, or build several new houses. Nestled on 3.86 acres of wooded splendor, this 1965 man...
Reduced -$100,000
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