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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563 Main Road
Johns Island, SC 29455
Residential
MLS# 23011354 / Active
Opportunity knocks once again! 2.17 acres zoned Rural Commercial! Mostly cleared, flat, high (no flood zone) w/ a 2,130 sqft 3br/1.5ba existing str...
714 Wilson Cemetery Road
Awendaw, SC 29429
Covenant Preserve
Residential
MLS# 23011031 / Active
Relax and escape to the natural paradise of Awendaw, a beautiful coastal town, just north of Charleston and Mt. Pleasant! Bordering the Francis Mar...
Reduced -$11,000
579 Faison Road UNIT #52
Mount Pleasant, SC 29466
Carolina Park
Residential
MLS# 23010990 / Active
Charleston's FIRST and only Luxury 'Storage Condominium' Gated Community! Luxury Storage Suites that you OWN! Car Collectors, Motorcycle Enthusiast...
Increase +$20,000
579 Faison Road UNIT #53
Mount Pleasant, SC 29466
Carolina Park
Residential
MLS# 23010989 / Active
Charleston's FIRST and only Luxury 'Storage Condominium' Gated Community! Luxury Storage Suites that you OWN! Car Collectors, Motorcycle Enthusiast...
Increase +$20,000
579 Faison Road UNIT #54
Mount Pleasant, SC 29466
Carolina Park
Residential
MLS# 23010988 / Active
Charleston's FIRST and only Luxury 'Storage Condominium' Gated Community! Luxury Storage Suites that you OWN! Car Collectors, Motorcycle Enthusiast...
Increase +$20,000
579 Faison Road UNIT #56
Mount Pleasant, SC 29466
Carolina Park
Residential
MLS# 23010985 / Active
Charleston's FIRST and only Luxury 'Storage Condominium' Gated Community! Luxury Storage Suites that you OWN! Car Collectors, Motorcycle Enthusiast...
Increase +$20,000
3002 Plow Ground Road
Johns Island, SC 29455
Residential
MLS# 23010779 / Active
Nestled on 81+ acres of lush land on Johns Island, this premiere equestrian estate is a dream come true for horse enthusiasts. Boasting two homes, ...
Reduced -$375,000
528 Hayes Park Boulevard UNIT Lot 4
Johns Island, SC 29455
Johns Island
Residential
MLS# 23010707 / Active
*NEVER BEFORE SEEN NEW CONSTRUCTION ON JOHNS ISLAND! Welcome to HAYES PARK Johns Island's only pedestrian-scale community that elevates your lifest...
Reduced -$90
1880 Andell Bluff Boulevard UNIT D-16
Seabrook Island, SC 29455
Bohicket Marina
Residential
MLS# 23010686 / Active
This 30 ft boat slip allows up to 15% overage and is positioned on the downstream side of ''D'' dock for easy ingress and egress. It is located mid...
Reduced -$3,000
2303 Cameron Boulevard
Isle of Palms, SC 29451
Residential
MLS# 23010577 / Active
Contemporary Lowcountry home one block from the beach on Cameron Blvd. House plans may be modified or exchanged for a new design until the foundati...
Reduced -$25,000
3115 Ion Avenue
Sullivans Island, SC 29482
Sullivans Island
Residential
MLS# 23010360 / Active
New co-ownership opportunity: Own one-eighth of this turnkey home, professionally managed by Pacaso. Casual elegance flows through this modern isla...
Increase +$24,000
3115 Ion Avenue
Sullivans Island, SC 29482
Sullivans Island
Residential
MLS# 23010359 / Active
New co-ownership opportunity: Own one-eighth of this turnkey home, professionally managed by Pacaso. Casual elegance flows through this modern isla...
Increase +$24,000
3115 Ion Avenue
Sullivans Island, SC 29482
Sullivans Island
Residential
MLS# 23010357 / Active
New co-ownership opportunity: Own one-eighth of this turnkey home, professionally managed by Pacaso. Casual elegance flows through this modern isla...
Increase +$24,000
541 Chimney Bluff Drive
Mount Pleasant, SC 29464
Hobcaw Creek Plantation
Residential
MLS# 23009727 / Active
Elegant custom stucco home with panoramic marsh view to Hobcaw Creek. Some new appliances, new downstairs a/c, some new hardwood floors, and a new ...
1620 Home Farm Road
Mount Pleasant, SC 29464
Home Farm
Residential
MLS# 23009623 / Active
This Charleston Charmer is True Stunner and will ''Wow'' you with its Incredible Marshfront Views of Sullivan's Island and Magnificent 360 Degree R...
Reduced -$300,000
2026 Little Avenue
North Charleston, SC 29405
Union Heights
Residential
MLS# 23009018 / Active
Great investment opportunity located in the area of North Charleston with continuous revitalization going on and property values is on the rise. Lo...
Reduced -$10,100
29 Nassau Street
Charleston, SC 29403
Residential
MLS# 23008993 / Active
Welcome to your dream home in historic Charleston, South Carolina! This stunning 1850s home is the perfect blend of historic charm and modern ameni...
Reduced -$100,000
1121 Euclid Drive
Charleston, SC 29492
Cain Crossing
Residential
MLS# 23008934 / Active
Beautiful largest floorplan on an end unit. Downstairs boast your open and inviting living/kitchen/breakfast nook combo with access to a screened i...
5147 S Hwy 17a
Ridgeville, SC 29472
Harts Bluff
Residential
MLS# 23008487 / Active
NEW PRICE on the EDISTO RIVER! Is Ridgeville going to be the New West Ashley? Invest now, things are moving that way! This property is empty & read...
Reduced -$20,000
154 Lake Timicau Lane
Dewees Island, SC 29451
Dewees Island
Residential
MLS# 23008266 / Active
This beautiful home has been recently updated and boasts four spacious bedrooms and three modern bathrooms. The home features breathtaking views of...
Reduced -$75,000
1000 Middleton Drive
Goose Creek, SC 29445
The Oaks
Residential
MLS# 23008230 / Active
Enjoy all the conveniences of ranch-style living in the single-story Beech home. Enter this inviting and spacious front entry with guest and second...
Increase +$6,000
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