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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2347 Tall Sail Drive UNIT J
Charleston, SC 29414
Seagate Village
Residential
MLS# 24030135 / Active
Welcome to waterfront living in Seagate Village! Step into this beautifully maintained second-floor condo offering 2 bedrooms & 2 bathrooms in Seag...
Reduced -$5,000
509 Live Oak Drive
Mount Pleasant, SC 29464
Residential
MLS# 24030128 / Active
We are pleased to offer three adjacent properties for sale in the heart of historic Mount Pleasant. The parcels are located on the corner of Scott ...
118 Carter
Walterboro, SC 29488
Residential
MLS# 24030119 / Active
STUNNING BRICK HOME IN WALTERBORODiscover this beautifully renovated 4-bed, 5-bath brick home with office space, located steps from USC Salkehatchi...
Reduced -$3,825,000
207 Scott Street
Mount Pleasant, SC 29464
Residential
MLS# 24030114 / Active
Oswald Cooke & Associates is pleased to offer three adjacent properties for sale in the heart of historic Mount Pleasant. The parcels are located o...
517 Seascape (1 Share of 13 )
Isle of Palms, SC 29451
Seascape Villas
Residential
This beautiful fifth floor 3 Bedroom and 3 Bath Penthouse offering unobstructed views of the Atlantic Ocean, is situated on the far end of the expa...
823 Recess Point Drive
Moncks Corner, SC 29461
Foxbank Plantation
Residential
MLS# 24029923 / Active
Discover the charm and convenience of this stunning, nearly new townhome that seamlessly blends modern design with functional living spaces. Locate...
Reduced -$8,000
221 S Plaza Ct UNIT #107
Mount Pleasant, SC 29464
Renaissance On Chas Harbor
Residential
MLS# 24029714 / Active
Welcome to 221 S Plaza Ct. located in the exquisite Renaissance on Charleston Harbor. Views! Views! Views! This luxurious condo has gorgeous views ...
Reduced -$60,000
317 W Hudson Avenue
Folly Beach, SC 29439
Sunset Point
Residential
MLS# 24029710 / Active
Just how much will you love living on Folly? Let's talk about some of the perks! On days you want to be out and about, you can: be on the beach in ...
Reduced -$25,000
316 Calm Water Way
Summerville, SC 29486
Cane Bay Plantation
Residential
MLS# 24029683 / Active
Move in NOW! Enjoy happy hour on the Chandler's covered back patio. Inside, the sprawling kitchen island overlooks the great room. In the primary s...
Reduced -$12,000
488 Sanctuary Park Drive
Summerville, SC 29486
Cane Bay Plantation
Residential
MLS# 24029673 / Active
This Price is HOT, HOT, HOT! Welcome to this beautifully designed home, perfectly situated on a peaceful pond lot in a sought-after neighborhood. O...
Reduced -$14,999
1979 Macon Avenue
North Charleston, SC 29405
Residential
MLS# 24029655 / Active
Investors DREAM. Not only does this come with a Fully Renovated and Charming Cottage of 1979 Macon Avenue. Great opportunity for everything you nee...
Reduced -$52,500
6155 Young Street
Ravenel, SC 29470
Ravenel Acres
Residential
MLS# 24029652 / Active
THIS IS IT!!!! manufactured home that has been completely remodeled. Close to everything in Ravenel. Home features include Smooth ceilings with fre...
Reduced -$15,000
30 Mariners Cay Drive
Folly Beach, SC 29439
Mariners Cay
Residential
MLS# 24029651 / Active
Welcome to beautiful Folly Beach and the wonderful riverfront community of Mariners Cay. This 2BR/2.5 Bath property offers spectacular views up & d...
Reduced -$10,000
4450 Hardwood Street
Ladson, SC 29456
Woodside Manor
Residential
MLS# 24029643 / Active
Calling all investors! This home is currently vacant and easy to show. This charming brick home in the heart of Ladson's Woodside Manor offers the ...
Reduced -$20,000
136 Winding River Drive
Johns Island, SC 29455
The Oaks Marsh View
Residential
MLS# 24029589 / Active
Seller may consider buyer concessions if made in an offer. Welcome to this beautifully updated property! The interior boasts a fresh coat of paint ...
Reduced -$4,000
780 Post Oak Drive
Mount Pleasant, SC 29464
Old Village Landing
Residential
MLS# 24029552 / Active
Stunning home in highly sought-after Old Village Landing! Open floor plan with high ceilings, hardwood floors and plantation shutters. Cedar beam a...
Reduced -$55,000
1062 Crescent Cove Lane
Summerville, SC 29483
Crescent Cove Villas
Residential
MLS# 24029547 / Active
Welcome Home to 1062 Crescent Cove Lane! An enclave of only 61 homes surrounded by trees. A great location, under 15 mins to downtown Summerville! ...
Reduced -$6,570
6261 Gritman Drive
Hollywood, SC 29449
The Oaks at Center Station
Residential
MLS# 24029522 / Active
READY NOW! Here you are, just 15 minutes to John's Island, 20 minutes to West Ashley, close to the airport and just minutes from the incredible bea...
Reduced -$5,000
3034 Cane Slash Road
Johns Island, SC 29455
Residential
MLS# 24029504 / Active
Must see to appreciate! Don't let the 2 bedrooms fool you! Over 2500sqft! This home is spacious with room to expand! Imagine your home in a clutch ...
Reduced -$9,000
3611 Yacht Club Road UNIT B
Edisto Island, SC 29438
Beach Walk
Residential
MLS# 24029502 / Active
Townhome duplexes speak of immense possibilities and unhindered imaginations and this one is no exception. This extraordinary, second-row remodeled...
Reduced -$41,000
371 Live Palmetto Bluff
Mount Pleasant, SC 29464
Residential
MLS# 24029496 / Active
The Bluff at Palmetto Plantation (X flood zone) is a hidden treasure in the heart of Mt Pleasant, just minutes from Palmetto Islands County Park on...
Reduced -$50,000
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 08-10-2025 10:51 AM EST .
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