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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4227 Barnwell Avenue
North Charleston, SC 29405
North Charleston
Residential
MLS# 26019133 / Active
Better than new and truly move-in ready! Just over a mile from Park Circle with no HOA, this nearly new end-unit townhome offers modern style, adde...
181 Orchid Bloom Circle
Moncks Corner, SC 29461
Townes at Merrimack
Residential
MLS# 26019131 / Active
Welcome to 181 Orchid Bloom Circle in the desirable Townes at Merrimack! This beautifully maintained 3-bedroom, 2.5-bath townhome offers a perfect ...
607 Portia Street
Edisto Island, SC 29438
Residential
MLS# 26019129 / Active
Just a short walk from the sand, this classic Edisto Beach home captures the quiet beauty of one of South Carolina`s most peaceful coastal communit...
107 Westminster Avenue
Summerville, SC 29485
Ashborough East
Residential
MLS# 26019127 / Active
This stunning home welcomes you with a sweeping wrap-around porch perfect for relaxing evenings. Beautiful wood floors flow seamlessly throughout t...
711 Center Street
Mount Pleasant, SC 29464
Waterway Arms
Residential
MLS# 26019123 / Active
Welcome to 711 Center Street, a masterfully renovated retreat nestled in one of Mount Pleasant`s most coveted neighborhoods. Perfectly positioned b...
2044 Echo Avenue
North Charleston, SC 29405
Union Heights
Residential
MLS# 26019120 / Active
Welcome home to your charming Bungalow in Union Heights! This newer construction home is designed with an open concept floor plan and spacious livi...
1603 Prince Edward Street
Mount Pleasant, SC 29466
Oyster Point
Residential
MLS# 26019116 / Active
Imagine mornings on your screened-in porch with coffee in hand, afternoons kayaking from the neighborhood dock, and evenings strolling to live musi...
6 29th Avenue
Isle of Palms, SC 29451
Isle Of Palms
Residential
MLS# 26019114 / Active
Best Price Per Square Foot on Isle of Palms for New Construction. This brand-new custom home offers one of the best values for new construction on ...
1505 Lindsey Creek Drive
Mount Pleasant, SC 29466
Carolina Park
Residential
MLS# 26019113 / Active
There is a certain magic found only on the most storied streets of the Lowcountry, lovingly coined ``the tree street`` where 200-year-old moss-drap...
2303 Cameron Boulevard
Isle of Palms, SC 29451
Residential
MLS# 26019112 / Active
There are beach houses, and then there are homes designed to become gathering places for generations. 2303 Cameron Boulevard is one of those rare o...
1131 Daffodil Lane
Mount Pleasant, SC 29464
Snee Farm
Residential
MLS# 26019110 / Active
Step into this cozy 3-bedroom, 2-bathroom home with cathedral ceilings and a wood-burning fireplace. Cherry hardwood floors throughout the main liv...
115 Blue Jasmine Lane
Summerville, SC 29483
Scotts Mill
Residential
MLS# 26019109 / Active
This well maintained 4-bed/2-bath home features a front porch, 2-car garage, mature landscaping, & back living space!Inside, an expansive open-conc...
185 Catamount Road
Holly Hill, SC 29059
East Holly Ridge
Residential
MLS# 26019104 / Active
Welcome to 185 Catamount Rd - a charming 3-bedroom, 2-bath home, offering approximately 1,300 square feet of comfortable living space on a spacious...
2593 Daniel Island Drive
Charleston, SC 29492
Daniel Island
Residential
MLS# 26019103 / Active
TOTAL SQ FT 2864 *** Modern coastal design, move-in-ready, and private lot (no alley). Home features open-concept floor plan, 10-foot ceilings, mod...
6001 Liddington Court
Summerville, SC 29485
Victoria Pointe
Residential
MLS# 26019102 / Active
Located on a spacious corner lot in Victoria Pointe, where homes rarely come on the market, this 3-bedroom, 2.5-bath home offers flexible living sp...
36 Manor Boulevard
Hanahan, SC 29410
Otranto
Residential
MLS# 26019101 / Active
Welcome to 36 Manor, a charming 3-bedroom, 2.5-bath home offering 1,564 square feet of comfortable living in an established neighborhood. The open ...
133 Stephanie Circle
Summerville, SC 29483
Belmont
Residential
MLS# 26019100 / Active
This one is more than just updated--it`s been completely renovated from the inside out and is truly move-in ready. Located in a quiet neighborhood ...
4281 Haulover Drive
Johns Island, SC 29455
Kiawah River Estates
Residential
MLS# 26019099 / Active
Live the Kiawah River Estates lifestyle, where mornings open to serene golf-course views and days unfold effortlessly between nature, leisure, and ...
149 Omalley Drive
Summerville, SC 29483
Six Oaks
Residential
MLS# 26019097 / Active
This beautiful townhome, less than 2 years old, is priced to give you the dream of homeownership in a community with some of the best amenities to ...
123 Brandywine Drive
Summerville, SC 29485
Ashborough East
Residential
MLS# 26019096 / Active
Welcome to 123 Brandywine Drive, a beautifully updated home nestled in the highly sought-after Ashborough East community in Summerville. Perfectly ...
292 Lucca Drive
Summerville, SC 29486
Cane Bay Plantation
Residential
MLS# 26019093 / Active
Discover the perfect blend of luxury, space, and convenience in this beautifully upgraded 5-bedroom, 4.5-bath home in desirable Summerville. Backin...
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