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
2001 Hunters Bend Trail
Ladson, SC 29456
Hunters Bend
Residential
MLS# 23024117 / Active
This beautiful property sits on a corner lot. This home has 9 in high vaulted ceilings in the family room.This beautiful open floor plan has 3 bedr...
Reduced -$5,000
2850 Headwater Drive
Summerville, SC 29486
Hewing Farms
Residential
MLS# 23024044 / Active
PROPOSED CONSTRUCTION. THIS FANTASTIC NEW SALUDA FLOOR PLAN FEATURES A 3 CAR GARAGE FIRST FLOOR GUEST SUITE AND CAN BE BUILT AS A 4, 5 or 6 BEDROOM...
336 Watergrass Street
Summerville, SC 29486
Nexton
Residential
MLS# 23023996 / Active
Nestled in the vibrant community of Nexton, this exquisite 3 bedroom, 2.5 bath home is both charming and offers modern conveniences. From the invit...
Reduced -$10,000
146 Blackwater Way
Moncks Corner, SC 29461
Fairmont South
Residential
MLS# 23023948 / Active
Welcome to 146 Blackwater Way! This great 4 bedroom 2.5 bath home is located within the sought after community of Fairmont South! The first floor c...
Reduced -$10,000
118 Ashley Cove Way
Summerville, SC 29483
Ashley Cove
Residential
MLS# 23023925 / Active
The Cypress is a three-story, four-bedroom, three-bath home with a formal dining room, a first-floor guest suite with a full bath, and a kitchen wi...
Reduced -$2,070
16 Center Street UNIT #2
Folly Beach, SC 29439
Residential
MLS# 23023893 / Active
Looking for a beach house in the center of it all? Then look no further that 16 Center St unit 2!! This unit has been completely updated to include...
Reduced -$25,000
133 Congaree Court
Santee, SC 29142
Center Pointe
Residential
MLS# 23023849 / Active
Limited time up to $20k finance incentive with builder's preferred lender and attorney. This homesite features a private lot with wooded buffer ove...
152 Spring Street UNIT F
Charleston, SC 29403
Cannonborough-Elliotborough
Residential
MLS# 23023835 / Active
152 Spring Street Unit F is conveniently located in downtown Charleston just a short walk from all amenities that make Charleston living so desired...
223 Grand Oaks Drive
Ladson, SC 29456
Grand Oaks Preserve
Residential
MLS# 23023833 / Active
This townhome in the quaint Grand Oaks Preserve is turnkey and offers one an income generating property, or simply one's primary home. Many upgrade...
Reduced -$3,000
5000 Middleton Drive
Goose Creek, SC 29445
The Oaks
Residential
MLS# 23023832 / Active
The Sago is a two-story, single-family home ideal for families wanting a private primary bedroom on the first floor away from the secondary bedroom...
Increase +$4,000
4000 Middleton Drive
Goose Creek, SC 29445
The Oaks
Residential
MLS# 23023806 / Active
Spread out in the Aspen, a two-story, single-family home featuring an oversized great room and adjoining kitchen for maximizing family time, privat...
Increase +$4,000
114 Ashley Cove Way
Summerville, SC 29483
Ashley Cove
Residential
MLS# 23023788 / Active
The Wilmington is a two-story, four-bedroom, two-and-a-half-bath home with a formal living room, formal dining room, spacious family room, and kitc...
Reduced -$2,615
675 Murraysville Road
Moncks Corner, SC 29461
Residential
Reduced -$1
23 22nd Avenue
Isle of Palms, SC 29451
Residential
MLS# 23023762 / Active
Welcome to this charming rancher nestled on a rare half-acre lot on the serene Isle of Palms, a true oasis of comfort and tranquility. This delight...
Reduced -$65,000
136 Bateaux Drive
Summerville, SC 29483
The Ponds
Residential
MLS# 23023760 / Active
This proposed construction is set to be completed by the third quarter of 2024. Your brand new home awaits on one of the most prominent and sought ...
Fickling Hill Road UNIT Tbd
Johns Island, SC 29455
Residential
MLS# 23023750 / Active
LIMITED FIRST PHASE INTRODUCTORY PRICING AVAILABLE NOW!! Charleston Toy Box - Your Ultimate Luxury Car Condo Community! Discover the pinnacle of ca...
Fickling Hill Road UNIT Tbd
Johns Island, SC 29455
Residential
MLS# 23023749 / Active
LIMITED FIRST PHASE INTRODUCTORY PRICING AVAILABLE NOW!! Charleston Toy Box - Your Ultimate Luxury Car Condo Community! Discover the pinnacle of ca...
Fickling Hill Road UNIT Tbd
Johns Island, SC 29455
Johns Island
Residential
MLS# 23023748 / Active
LIMITED FIRST PHASE INTRODUCTORY PRICING AVAILABLE NOW!! Introducing Charleston Toy Box - Your Ultimate Luxury Car Condo Community! Discover the pi...
Fickling Hill Road UNIT Tbd
Johns Island, SC 29455
Johns Island
Residential
MLS# 23023745 / Active
LIMITED FIRST PHASE INTRODUCTORY PRICING AVAILABLE NOW!! Introducing Charleston Toy Box - Your Ultimate Luxury Car Condo Community! Discover the pi...
Fickling Hill Road UNIT Tbd
Johns Island, SC 29455
Johns Island
Residential
MLS# 23023744 / Active
LIMITED FIRST PHASE INTRODUCTORY PRICING AVAILABLE NOW!! Introducing Charleston Toy Box - Your Ultimate Luxury Car Condo Community! Discover the pi...
Fickling Hill Road UNIT Tbd
Johns Island, SC 29455
Johns Island
Residential
MLS# 23023743 / Active
LIMITED FIRST PHASE INTRODUCTORY PRICING AVAILABLE NOW!! Introducing Charleston Toy Box - Your Ultimate Luxury Car Condo Community! Discover the pi...
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 EXP Realty LLC 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 05-09-2024 11:54 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 2024 Charleston Trident Multiple Listing Service, Inc. All rights reserved.