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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146 Broadstone Drive
Summerville, SC 29486
Sheep Island
Residential
MLS# 26019266 / Active
New construction home with conservation views - just minutes from Nexton!Welcome to 104 Broadstone, a thoughtfully designed new construction home i...
Reduced -$4,362
1129 Lands End Drive
Hanahan, SC 29410
Tanner Plantation
Residential
MLS# 26019265 / Active
Welcome to this stunning custom Charleston Single-style home nestled in Tanner Hall, one of Hanahan`s most desirable neighborhoods. Combining timel...
600 Waterman Street UNIT Unit 732
Charleston, SC 29492
Residential
MLS# 26019262 / Active
Wake up to sweeping Wando River views, breathtaking Lowcountry sunrises, and the ease of maintenance-free waterfront living. Recently taken off the...
413 Cedarview Road
Summerville, SC 29486
Cane Bay Plantation
Residential
MLS# 26019258 / Active
Welcome home to this beautifully maintained 3-bedroom, 2.5 bath, two story home located in a highly desirable community packed with resort style am...
1281 Horseshoe Bend
Mount Pleasant, SC 29464
Sweetgrass
Residential
MLS# 26019257 / Active
Delightful pond site home with unmatched curb appeal in the coveted Sweetgrass neighborhood in Mt Pleasant. This highly desirable location with its...
608 Ocean Boulevard
Isle of Palms, SC 29451
Isle Of Palms
Residential
MLS# 26019256 / Active
Positioned on one of the widest and most desirable stretches of beach on Isle of Palms, 608 Ocean Boulevard is a remarkable oceanfront retreat wher...
200 Cache Court
Charleston, SC 29414
Bermuda Pointe Towns
Residential
MLS# 26019255 / Active
This beautiful townhome, currently the builder`s model for the community, has never been lived in and is immaculate! With the upgraded features tha...
2363 Eades Lane
Charleston, SC 29414
Sylvan Shores
Residential
MLS# 26019251 / Active
Deep water access! Sylvan Shores is beloved for its quiet streets, exceptional walkability, and connection to nature, including a scenic path throu...
305 Northam Court
Goose Creek, SC 29445
Devon Forest
Residential
MLS# 26019250 / Active
Beautifully maintained and truly move-in ready, this exceptional home is located in a quiet cul-de-sac and offers the perfect combination of comfor...
3728 Abercrombie Court
Mount Pleasant, SC 29466
Carolina Park
Residential
MLS# 26019249 / Active
With 4 bedrooms, 3 full bathrooms, a dedicated home office, and a spacious loft, this Carolina Park home checks all the boxes! Tucked away on a pri...
5038 Foxwood Drive
North Charleston, SC 29418
Forest Hills
Residential
MLS# 26019246 / Active
Well-loved and well-maintained 2/1.5 townhome in the established Forest Hills community of North Charleston. Cared for by its longtime owner, the h...
2453 Sorrell Avenue
North Charleston, SC 29406
Northwoods Villas
Residential
MLS# 26019245 / Active
Welcome to 2453 Sorrel Avenue in North Charleston--a charming end-unit townhouse offering a LOW HOA FEE of $95/mo with fee simple ownership, deeded...
5557 Green Dolphin Way
Kiawah Island, SC 29455
Kiawah Island
Residential
MLS# 26019243 / Active
Welcome to 5557 Green Dolphin Way, a beautifully positioned Kiawah Island villa offering the perfect blend of relaxation, convenience, and investme...
1618 Patterson Avenue
Charleston, SC 29412
Bayfront
Residential
MLS# 26019242 / Active
Perfectly positioned between the historic charm of Downtown Charleston and the laid-back beauty of Folly Beach, 1618 Patterson Avenue offers an exc...
204 Buttercup Lane
Summerville, SC 29486
Cane Bay Plantation
Residential
Welcome home to this beautifully kept 5 bedroom and 4 bath home in The Oaks of Cane Bay Plantation! Upon entering, you are greeted by the perfect o...
2455 Deer Ridge Lane UNIT Unit C
North Charleston, SC 29406
Elms Of Charleston
Residential
MLS# 26019238 / Active
Enjoy low-maintenance living in this inviting single-story condo in a gated 55+ community. The freshly painted home features 2 bedrooms, 1.5 baths,...
313 Lucca Drive
Summerville, SC 29486
Cane Bay Plantation
Residential
MLS# 26019236 / Active
Hard-to-find 5 bedroom home in Cane Bay with pond views, added privacy, and room for everyone -- all under $460k. Built in 2023, this move-in ready...
7880 Champion Way UNIT D
North Charleston, SC 29418
The Park At Rivers Edge
Residential
MLS# 26019234 / Active
Why settle for someone else`s outdated finishes when you can move into a home where the major updates are already complete? This beautifully update...
152 W Mariners Cay Drive UNIT #152
Folly Beach, SC 29439
Marshview Villas
Residential
MLS# 26019231 / Active
Welcome to Marshview Villas, where Lowcountry living meets convenience, recreation and coastal charm. This gated waterfront community offers one of...
5126 Celtic Drive
North Charleston, SC 29405
Oak Terrace Preserve
Residential
MLS# 26019227 / Active
Welcome home to 5126 Celtic Drive, a well-maintained 3 bedroom, 2.5 bathroom home that perfectly captures the essence of southern living in North C...
1190 Gin Pond Drive
Summerton, SC 29148
Gin Pond
Residential
MLS# 26019226 / Active
Discover peaceful lakefront living in this beautifully updated 3 bedroom, 2 bath home on the shores of Lake Marion. Located on a quiet dead-end str...
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