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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3009 Doar Road
Awendaw, SC 29429
Residential
MLS# 26019685 / Active
Set within the serene location of Doar Creek, this thoughtfully designed Proposed Construction Julian floor plan offers refined living on a spaciou...
940 E Estates UNIT Unit 5l
Charleston, SC 29414
Longbranch
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MLS# 26019684 / Active
Tucked away on a quiet cul-de-sac in the desirable LongBranch Point community, this townhome-style condo offers comfortable, low-maintenance living...
1574 Charming Nancy Road
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MLS# 26019683 / Active
Experience the perfect blend of Lowcountry elegance and modern luxury in this exceptional custom home, built just three years ago and ideally situa...
677 Buckhall Court UNIT Unit C
Mount Pleasant, SC 29464
Bay Tree
Residential
MLS# 26019679 / Active
Welcome to BayTree, one of South Mount Pleasant`s best-kept secrets, where an unbeatable location meets exceptional flexibility. Tucked away on a q...
1019 Plantation Court
Mount Pleasant, SC 29464
Snee Farm
Residential
MLS# 26019677 / Active
Rare opportunity in the highly desirable Snee Farm Country Club! This Charleston Single-style home is ready for a complete transformation and offer...
361 Glide Slope Street
Charleston, SC 29492
Point Hope
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MLS# 26019675 / Active
ESTIMATED COMPLETION January 2027! Beautiful Wando floor plan with loft offering exceptional space and functionality. The first floor features a sp...
127 Cozy Nest Way
Summerville, SC 29483
Mallard Crossing
Residential
MLS# 26019673 / Active
Welcome to 127 Cozy Nest Way, located in the desirable Mallard Crossing community in Summerville. You`re just 8 minutes from Nexton Square, 12 minu...
8203 Jack Island
Johns Island, SC 29455
Kiawah River
Residential
MLS# 26019672 / Active
Designed to flow as naturally as the tides that shape the Lowcountry, this thoughtfully crafted residence at Kiawah River offers a seamless connect...
106 Macy Circle
Goose Creek, SC 29445
Persimmon Hill Townhouses
Residential
MLS# 26019671 / Active
Beautifully updated 2 bedroom, 1.5 bath townhome in Persimmon Hill, ideally located in Goose Creek near shopping and dining. Step inside to fresh p...
109 Riley Farms Court
Summerville, SC 29486
Cane Bay Plantation
Residential
MLS# 26019670 / Active
Welcome to 109 Riley Farms Court, an impeccably upgraded 4-bedroom, 2.5-bathroom residence nestled within the highly sought-after Hammocks at Cane ...
1921 Chatelain Way
Mount Pleasant, SC 29464
Southampton Pointe
Residential
MLS# 26019668 / Active
Welcome to Southampton Pointe in South Mt Pleasant! Arguably in the best building, this renovated 2nd-floor 1BR/1BA condo features a screened balco...
279 Hawthorne Street
Mount Pleasant, SC 29464
Bay View Acres
Residential
MLS# 26019667 / Active
Exceptional location in the desirable neighborhood of Bayview Acres on a spacious lot. Enjoy the perfect combination of privacy and convenience wit...
988 Nabors Drive
Charleston, SC 29412
Lawton High
Residential
MLS# 26019666 / Active
Welcome to 988 Nabors Drive -- a beautifully updated 3 bedroom, 2 bath single-story home in the heart of James Island, where downtown Charleston is...
6515 Highway 162
Hollywood, SC 29449
Hollywood
Residential
MLS# 26019665 / Active
✨ NOW COMPLETE & MOVE-IN READY -- INCLUDING REFRIGERATOR, WASHER & DRYER! ✨ Be among the first to experience this beautifully finished new construc...
3091 Sturbridge Road
Mount Pleasant, SC 29466
Dunes West
Residential
MLS# 26019663 / Active
Welcome home to this sun-drenched, executive end-unit townhome located behind the highly coveted, secure gates of Dunes West. Designed to offer the...
160 Cypress Plantation Road
Moncks Corner, SC 29461
Strawberry Station
Residential
MLS# 26019660 / Active
Welcome home to this exceptionally well maintained home in Strawberry Station. Built in 2022, this one level home is ready for its next owner. Open...
4957 Trump Street
North Charleston, SC 29420
Charleston Park
Residential
MLS# 26019657 / Active
Move right into this beautifully maintained one-story home built in 2008, offering the perfect blend of comfort, convenience, and low-maintenance l...
6002 Wild Azalea Road
Summerville, SC 29483
The Ponds
Residential
MLS# 26019652 / Active
Welcome to 6002 Wild Azalea Road, an impeccably curated residence showcasing The Fir, the most coveted floor plan within the award-winning 55+ Cres...
141 Wando Reach Road
Charleston, SC 29492
Wando Point
Residential
MLS# 26019648 / Active
Behind the gates of Wando Point, where moss-draped oaks, waterfront homes, and quiet streets create one of Mount Pleasant`s most private enclaves, ...
2403 Castlereagh Road
Charleston, SC 29414
Hemmingwood
Residential
MLS# 26019647 / Active
Welcome to this charming, fully renovated home located in a desirable Charleston neighborhood. Featuring 3 spacious bedrooms and 2 beautifully upda...
260 Cloverleaf Acres Lane
Summerville, SC 29486
The Crossing at St. James
Residential
MLS# 26019644 / Active
New Charleston-Style Townhome in Goose Creek | 2-Car Garage & Front Porch LivingWelcome home to 266 Cloverleaf Acres Lane, located in The Crossing ...
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