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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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
2 Laurens Street UNIT Unit 1d
Charleston, SC 29401
Gadsdenboro
Residential
MLS# 26019304 / Active
Set within one of downtown Charleston`s most desirable concierge buildings, Unit 1-D at 2 Laurens Street offers a rare combination of refined inter...
2335 Eades Lane
Charleston, SC 29414
Sylvan Shores
Residential
MLS# 26019303 / Active
Welcome to 2335 Eades Lane, nestled in the beautiful Sylvan Shores neighborhood. Situated on a quiet cul-de-sac, this stately brick home is approac...
405 Principal Court
Ladson, SC 29456
Eagle Run
Residential
405 Principal Court lives up to its namesake - earning top marks from the moment you turn onto the cul-de-sac. Set on a spacious .29-acre lot with ...
215 Colleton Loop
Walterboro, SC 29488
Forest Park
Residential
MLS# 26019299 / Active
THIS 1062 SQFT THREE BEDROOM ONE AND A HALF BATH HOME IS LOCATED IN WALTERBORO. IT IS LIVABLE BUT IT IS A HANDYMAN SPECIAL.
102 Harper Street
Walterboro, SC 29488
Residential
MLS# 26019298 / Active
THIS 1376 SQFT HOME HAS THREE BEDROOMS ONE AND HALF BATHROOMS THIS HOME IS LOCATED AT 102 HARPER STREET IN WALTERBORO. A HANDYMAN SPECIAL WITH SO M...
428 Watergrass Way
Summerville, SC 29485
Summers Corner
Residential
Every Great Story Starts Somewhere. Yours Starts Here Picture it: a tree-lined street, crepe myrtles in full bloom, a white picket fence, and a fro...
1171 Braddock Avenue
North Charleston, SC 29405
North Charleston
Residential
MLS# 26019295 / Active
SELLER SAYS SELL!! NEW ROOF, NEW HVAC with NEW DUCTWORK-- heavy updates done!! Now it`s time to add your personal updates. Priced relive of updates...
171 Highwoods Plantation Avenue
Summerville, SC 29485
Highwoods Plantation
Residential
MLS# 26019293 / Active
Welcome home to this charming 3-bedroom, 2-bath home located in the highly desirable Highwoods Plantation of Summerville. This well-maintained home...
203 Plowden Mill Court
Summerville, SC 29485
Drayton Oaks
Residential
MLS# 26019291 / Active
Come see 203 Plowden Mill Ct, arranged for everyday comfort and practical living. A welcoming fireplace enhances the interior, while the kitchen fe...
106 Maplewood Court
Goose Creek, SC 29445
Crowfield Plantation
Residential
MLS# 26019287 / Active
***Ask about the possibility of receiving 1% reduction in interest rate and free refi.***With standout curb appeal, a functional layout, and a prim...
19 Grand Pavilion Boulevard
Isle of Palms, SC 29451
Wild Dunes
Residential
MLS# 26019285 / Active
Experience effortless beachfront living in the heart of Wild Dunes Resort, where sweeping Atlantic views, direct beach access, and exceptional reso...
2809 Parkers Landing Road
Mount Pleasant, SC 29466
Rivertowne Country Club
Residential
MLS# 26019284 / Active
DEEP WATER PRIVATE DOCK with 7,000 lb boat lift and massive floater for 40`+ boats overlooking Horlbeck Creek! 2809 Parkers Landing in Rivertowne C...
123 Benton Street
Goose Creek, SC 29445
Camelot Village
Residential
MLS# 26019283 / Active
New, New, New!!! This fully renovated one story ranch in desired Camelot Village is move in ready. Home interior features all new flooring (NO CARP...
441 Radiant Blue Way
Summerville, SC 29486
Cane Bay Plantation
Residential
MLS# 26019282 / Active
Brand NEW energy-efficient home! Designer Package Bold Sophistication. The Hurley`s welcoming foyer gives way to the spacious kitchen and open-conc...
Reduced -$10,000
619 Piedmont Lane
Ladson, SC 29456
College Park
Residential
MLS# 26019280 / Active
619 Piedmont Ln is a 1-story Ladson single- home built in 1979 on a cul-de-sac lot. The kitchen is equipped with white cabinetry, stainless steel a...
3176 Hagerty Drive
Charleston, SC 29414
Maclaura Hall
Residential
MLS# 26019277 / Active
Explore 3176 Hagerty Dr, designed for everyday comfort with functional spaces throughout. The kitchen is equipped with all stainless steel applianc...
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