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
2290 N Palmetto Fort Drive
Mount Pleasant, SC 29466
Palmetto Fort
Residential
MLS# 23013966 / Active
Extraordinary, one-of-a-kind, 5-acre farm in the middle of Mt Pleasant! This beautifully designed, custom-built horse farm is adjacent to Oyster Po...
Reduced -$200,000
2833 Rowley Lane
Summerville, SC 29486
Cane Bay Plantation
Residential
MLS# 23013844 / Active
PROPOSED CONSTRUCTION! This gorgeous new Saluda floor plan features a 3 car garage. Options include a first floor guest suite, 4-6 bedrooms, loft, ...
Reduced -$1,000
7 Fairway Dunes Lane
Isle of Palms, SC 29451
Wild Dunes
Residential
MLS# 23013800 / Active
Looking for a place at the beach for 4 weeks of the year. Here is a perfect place. The condo is located at Wild Dunes on the Isle of Palms. The Con...
1715 Middle Street
Sullivans Island, SC 29482
Sullivans Island
Residential
MLS# 23013412 / Active
Build your dream home, Ocean, Beach, Bay, and History! Extraordinary opportunity to live on coveted Sullivan's Island in Charleston South Carolina....
Reduced -$100,000
1081 Saint Thomas Island Drive
Charleston, SC 29492
Residential
MLS# 23013394 / Active
What a unique opportunity to live and have all of the conveniences of Daniel Island without all the HOA restrictions and room to spread out on over...
Reduced -$50,000
2038 Bullyard Sound Way
Awendaw, SC 29429
Enclave at Copahee Sound
Residential
MLS# 23013253 / Active
Indulge in the coastal Carolina lifestyle at The Enclave, where luxury meets spaciousness. The Enclave includes Gas Lanterns, Granite Countertops, ...
Increase +$57,993
2042 Bullyard Sound Way
Awendaw, SC 29429
Enclave at Copahee Sound
Residential
MLS# 23013252 / Active
Indulge in the coastal Carolina lifestyle at The Enclave, where luxury meets spaciousness. The Enclave includes Gas Lanterns, Granite Countertops, ...
Increase +$60,639
2046 Bullyard Sound Way
Awendaw, SC 29429
Enclave at Copahee Sound
Residential
MLS# 23013251 / Active
Indulge in the coastal Carolina lifestyle at The Enclave, where luxury meets spaciousness. The Enclave includes Gas Lanterns, Granite Countertops, ...
Increase +$50,309
2049 Bullyard Sound Way
Awendaw, SC 29429
Enclave at Copahee Sound
Residential
MLS# 23013249 / Active
Indulge in the coastal Carolina lifestyle at The Enclave, where luxury meets spaciousness. The Enclave includes Gas Lanterns, Granite Countertops, ...
Increase +$56,757
2045 Bullyard Sound Way
Awendaw, SC 29429
Enclave at Copahee Sound
Residential
MLS# 23013248 / Active
Indulge in the coastal Carolina lifestyle at The Enclave, where luxury meets spaciousness. The Enclave includes Gas Lanterns, Granite Countertops, ...
Increase +$2,493
2037 Bullyard Sound Way
Awendaw, SC 29429
Enclave at Copahee Sound
Residential
MLS# 23013246 / Active
Indulge in the coastal Carolina lifestyle at The Enclave, where luxury meets spaciousness. The Enclave includes Gas Lanterns, Granite Countertops, ...
Increase +$57,441
204 Saunter Court UNIT Lot 29
Johns Island, SC 29455
Hayes Park
Residential
MLS# 23013235 / Active
*NEVER BEFORE SEEN NEW CONSTRUCTION ON JOHNS ISLAND! Welcome to HAYES PARK Johns Island's only pedestrian-scaled community that elevates your lifes...
Increase +$26,000
200 Saunter Court UNIT Lot 30
Johns Island, SC 29455
Hayes Park
Residential
MLS# 23013233 / Active
*NEVER BEFORE SEEN NEW CONSTRUCTION ON JOHNS ISLAND! Welcome to HAYES PARK Johns Island's only pedestrian-scaled community that elevates your lifes...
Increase +$35,000
3886 Watson View Drive
Awendaw, SC 29429
Watson View
Residential
MLS# 23013212 / Active
Embrace the timeless elegance of Lowcountry living, Watson View features classic architecture seamlessly blending with modern convenience. Welcome ...
Increase +$5,000
4113 Craig Ascue Lane
Awendaw, SC 29429
Watson View
Residential
MLS# 23013206 / Active
Embrace the timeless elegance of Lowcountry living, Watson View features classic architecture seamlessly blending with modern convenience. Welcome ...
Increase +$5,000
205 Saunter Court UNIT Lot 23
Johns Island, SC 29455
Hayes Park
Residential
MLS# 23013037 / Active
*NEVER BEFORE SEEN NEW CONSTRUCTION ON JOHNS ISLAND! Welcome to HAYES PARK Johns Island's only pedestrian-scaled community that elevates your lifes...
Increase +$22,000
201 Saunter Court UNIT Lot 22
Johns Island, SC 29455
Hayes Park
Residential
MLS# 23013036 / Active
*NEVER BEFORE SEEN NEW CONSTRUCTION ON JOHNS ISLAND! Welcome to HAYES PARK Johns Island's only pedestrian-scaled community that elevates your lifes...
Increase +$22,000
351 St. Paul Road
Dorchester, SC 29437
Residential
MLS# 23012807 / Active
Welcome to 351 St Paul Road! True country living at its best! Tucked away behind an automatic gate, you'll find this 4 bedroom 2 bath home situated...
Reduced -$20,000
505 Ocean Mist Way
Summerville, SC 29486
Cane Bay Plantation
Residential
MLS# 23012720 / Active
LIST PRICE REFLECTS THOUSANDS IN FREE DESIGNER OPTIONS AS PART OF OUR PRE-GRAND OPENING SPECIAL. Enjoy the ''Lock and leave'' lifestyle in one of f...
Increase +$4,000
4218 River Road
Johns Island, SC 29455
Residential
MLS# 23012694 / Active
Live Work Property on Johns Island. Newly constructed 1500 SF Warehouse and 1,296 SF Live/Work office unit.
162 Basket Grass Lane
Summerville, SC 29486
Cane Bay Plantation
Residential
MLS# 23012510 / Active
*Seller is Offering $5000 towards Buyer's Closing Costs with an Acceptable Offer! Great opportunity to own this spacious 5 bedroom, 4 1/2 bath home...
Reduced -$13,000
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 05-13-2024 12:29 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.