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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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Why settle for someone else`s outdated finishes when you can move into a home where the major updates are already complete?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...
130 River Landing Drive UNIT #9102
Charleston, SC 29492
Daniels Landing
Residential
MLS# 26019224 / Active
The living is easy at this bright & sunny first-floor Daniel Island condo! Enjoy low-maintenance living with no stairs to navigate and a quick walk...
632 Silver Moss Drive
Moncks Corner, SC 29461
Moss Grove Plantation
Residential
MLS# 26019223 / Active
Welcome home to classic Southern charm and exceptional space! Featuring stunning double front porches, this beautifully updated 5-bedroom, 3.5-bath...
167 Lucca Drive
Summerville, SC 29486
Cane Bay Plantation
Residential
MLS# 26019222 / Active
This stunning home in the highly sought-after Woodwinds at Cane Bay! From the moment you step inside, you`ll love the bright, open layout designed ...
4425 Lambert Street
North Charleston, SC 29405
Park Circle
Residential
MLS# 26019221 / Active
Wanna start your morning with an amazing view filled walk and end it with a little coffee house coffee? This amazing home, located in the inclusive...
1736 Central Avenue
Summerville, SC 29483
Knightsville
Residential
MLS# 26019220 / Active
Opportunity awaits with this 2-bedroom, 1-bath home situated on an expansive 1.94-acre lot just minutes from the heart of Historic Downtown Summerv...
204 Cane Break Lane
Goose Creek, SC 29445
Woodland Lakes
Residential
MLS# 26019217 / Active
Welcome Home! This updated 4-bedroom, 2-bath home offers the perfect blend of comfort and modern upgrades--with no HOA! Step inside to find a gorge...
305 Palm Boulevard
Isle of Palms, SC 29451
Residential
MLS# 26019214 / Active
Owner/Agent Designed by award-winning local architects Clancy Wells and masterfully built by Allen Construction, this extraordinary custom waterfro...
1931 Chatelain Way
Mount Pleasant, SC 29464
Southampton Pointe
Residential
MLS# 26019213 / Active
Beautiful, upgraded, pristine top-floor condo in the gated community of Southampton Pointe in the heart of Mount Pleasant. Over $14,000 in Improvem...
Reduced -$30,000
149 Southwold Circle
Goose Creek, SC 29445
Crowfield Plantation
Residential
MLS# 26019211 / Active
Welcome home to 149 Southwold Circle, situated in the quaint Cherry Hill subsection of Crowfield Plantation! Featuring 3 bedrooms and 2 bathrooms t...
1012 Summerall Road
Johns Island, SC 29455
Morris Acres
Residential
MLS# 26019209 / Active
Welcome to 1012 Summerall Road, a beautifully maintained home nestled in the established Morris Acres community on Johns Island. Situated on a spac...
4007 Capensis Lane
Ravenel, SC 29470
Poplar Grove
Residential
MLS# 26019208 / Active
Charleston elegance and peaceful pond views are abundant here at 4007 Capensis Lane in beautiful and natural Poplar Grove! Charleston gas lanterns,...
4703 Bennington Place
North Charleston, SC 29420
Appian Landing
Residential
MLS# 26019207 / Active
Welcome to this charming home tucked away on a quiet cul-de-sac in the desirable Appian Landing community. Located in the highly sought-after Dorch...
4758 Aster Drive
North Charleston, SC 29405
Morningside
Residential
MLS# 26019201 / Active
Welcome to 4758 Aster Drive- a beautifully renovated two-bedroom, two-bathroom home nestled just minutes from the heart of Park Circle. This deligh...
133 Green Thistle Way
Summerville, SC 29483
Dawson Pointe
Residential
MLS# 26019199 / Active
This new two-story home features a modern layout that maximizes space and comfort. On the first floor is the open-concept main living area, which i...
8524 Stonebridge Drive
North Charleston, SC 29420
Whitehall
Residential
MLS# 26019197 / Active
come to 8524 Stonebridge Drive, where thoughtful updates and modern finishes make this home truly move-in ready. Nearly every surface has been refr...
3429 Fairwater Place
Mount Pleasant, SC 29465
Carolina Park
Residential
MLS# 26019194 / Active
Discover 3429 Fairwater Place! Step onto the rare double front porches spanning both the first and second floors. There is an extended driveway in ...
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