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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3906 Heron Marsh Circle
Johns Island, SC 29455
Gift Plantation
Residential
MLS# 24026221 / Active
Motivated Seller!!! Nestled in the serene Gift Plantation community, 3906 Heron Marsh Circle is a stunning 3,400 sq. ft. tidal marsh-front home off...
Reduced -$50,000
1746 Pierpont Avenue
Charleston, SC 29414
Pierpont
Residential
MLS# 24026201 / Active
. Beautiful ''farm house appeal'' one story home built in 2023 located on approx. 1/2 ac. in West Ashley with NO HOA! An open floor plan with 3 bed...
Reduced -$19,000
620 Chigwell Springs Lane
Summerville, SC 29486
Cane Bay Plantation
Residential
MLS# 24026191 / Active
Welcome to your dream home in the desirable West Lake subdivision of Cane Bay! This inviting 5-bedroom, 3-bathroom residence perfectly blends comfo...
Reduced -$15,000
205 Whitesville Road
Moncks Corner, SC 29461
Whitesville
Residential
MLS# 24026088 / Active
Charming Updated Home with Modern Upgrades. Welcome to 205 Whitesville, nestled in the heart of Moncks Corner, South Carolina! This beautifully upd...
Reduced -$9,999
7848 Pelican Bay Drive
Awendaw, SC 29429
Bulls Bay Overlook
Residential
MLS# 24026084 / Active
Let peace wash over you as you make your way to 7848 Pelican Bay Dr within Bulls Bay Overlook, a tranquil upscale gated community with its own priv...
3956 Treebranch Circle
Mount Pleasant, SC 29429
Bees Crossing
Residential
MLS# 24026063 / Active
A very spacious and beautiful home that you don't want to miss. The home is on a very quiet cul de sac in a close neighborhood. You will find large...
Reduced -$25,000
127 William Clark Boulevard
Santee, SC 29142
Center Pointe
Residential
MLS# 24025710 / Active
Appraisal in hand for higher than asking price! As you step inside this beautiful home, you are greeted by a long welcoming hallway. To your right,...
Reduced -$15,000
818 Club Cottage Court
Edisto Beach, SC 29438
Wyndham Ocean Ridge
Residential
MLS# 24025591 / Active
Opportunity Awaits! This Charming Club Cottage Duplex Villa is centrally located in gated Wyndham Ocean Ridge Resort community. Totally renovated w...
Reduced -$15,000
14 Lockwood Drive UNIT 10d
Charleston, SC 29401
Ashley House
Residential
MLS# 24025484 / Active
This stunning 10th-floor condo offers breathtaking, unobstructed views of the Ashley River and the marina. Featuring two spacious bedrooms and two ...
Reduced -$80,000
7629 Pinehurst Street
North Charleston, SC 29420
Ashley Heights
Residential
MLS# 24025432 / Active
Welcome Home! This charming, move-in ready 3-bedroom, 2-bath brick ranch is perfectly situated in the heart of it all. Nestled on a spacious 0.29-a...
59 Ashe Street
Charleston, SC 29403
Elliotborough
Residential
MLS# 24025309 / Active
A prominent property on the corner of Ashe Street, this downtown home has been meticulously renovated, rebuilt entirely while preserving original h...
Reduced -$15,000
10 N Huspah Court
Seabrook, SC 29940
Sheldon
Residential
MLS# 24025298 / Active
Waterfront Opportunity on Huspah Creek - Seabrook, SC*No HOA *Dock Potential*Build Your Dream HomeStep into the heart of the Lowcountry with this r...
Reduced -$55,000
4910 Green Dolphin Way
Kiawah Island, SC 29455
Turtle Point
Residential
MLS# 24025260 / Active
Great Opportunity to own an amazing 2BR/2BA Turtle Point villa with stunning views overlooking the 18th green and lagoon at Turtle Point Golf Cours...
3703 Hartnett Boulevard
Isle of Palms, SC 29451
Forest Trail
Residential
MLS# 24025185 / Active
Contemporary vacation home 2 blocks from the beach . Estimated completion December 2025. The home can be built as an inverted floor plan as shown o...
Reduced -$50,000
420 Carolina Cherry Court UNIT #102
Charleston, SC 29414
Shadowmoss
Residential
MLS# 24024778 / Active
NEW CONSTRUCTION!! Middleborough Condominiums, located in the heart of Charleston's garden district in West Ashley offer luxury and a maintenance f...
Reduced -$20,000
1151 Saint Pauls Parrish Lane
Johns Island, SC 29455
The Gates Of Fenwick Plantation
Residential
MLS# 24024714 / Active
BACK ON THE MARKET AT NO FAULT BY THE SELLER!! Welcome to Your New Home in The Gates of Fenwick Plantation!Discover easy living in this spacious to...
Reduced -$6,000
9002 Palmetto Drive UNIT #512
Isle of Palms, SC 29451
Wild Dunes
Residential
MLS# 24024631 / Active
Enjoy stunning, unobstructed views of the Atlantic Ocean from this 3 bedroom, 3 bath condo in Seascape Villas. This condo is being sold fully furni...
Reduced -$50,000
2473 High Hammock Road
Seabrook Island, SC 29455
Seabrook Island
Residential
MLS# 24024558 / Active
One of the best priced single family homes on island all w million dollar views. On Ocean Winds 16th. Panoramic 180 degree views of fairway and mar...
Reduced -$100,000
218 E Huron Avenue
Folly Beach, SC 29439
Folly Beach
Residential
MLS# 24024485 / Active
Rare opportunity to live on the Folly River! Just minutes from downtown Charleston, SC, this darling 3 Bedroom, 2 bath riverfront cottage has been ...
705 S Magnolia Street
Summerville, SC 29483
Historic District
Residential
MLS# 24024469 / Active
TWO HOMES IN ONE!! 9 BEDS 9 BATHS OVER 6700 SQ FT COMBINED!! 5 bed 4.5 bath 4700 sq ft Main House PLUS 4 bed 3.5 bath 2000 sq ft Guest House. Locat...
621 Plantation Drive
Santee, SC 29142
Chapel Creek Plantation
Residential
The home of your dreams awaits at 621 Plantation Dr, inside the sought-after golf course neighborhood of Chapel Creek Plantation. This Brand New si...
Reduced -$10,000
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