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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1015 White Egret Run
Summerville, SC 29485
Summers Corner
Residential
MLS# 26019055 / Active
Discover HORIZONS, an active adult community for those 50 and better! A place where you can wake up with countless opportunities but no commitments...
114 Vessey Drive
Moncks Corner, SC 29461
Spring Grove Plantation
Residential
MLS# 26019053 / Active
Comfort, character and convenience-all in one place!! Step inside to discover a bright, open-concept floor plan featuring spacious living areas, ab...
152 Cowrie Court
Mount Pleasant, SC 29464
Etiwan Pointe
Residential
MLS# 26019052 / Active
Experience effortless Lowcountry living in this exceptional Etiwan Point townhome featuring an ELEVATOR, stunning marsh views, and elegant finishes...
1006 Toadfish Run
Summerville, SC 29485
Summers Corner
Residential
MLS# 26019050 / Active
Discover HORIZONS, an active adult community for those 50 and better! A place where you can wake up with countless opportunities but no commitments...
Reduced -$4,100
342 Hickory Nut Way
Cross, SC 29436
Residential
MLS# 26019049 / Active
Welcome to this stunning, brand-new 4-bedroom, 3-bathroom manufactured home offering over 2,000 square feet of comfortable, modern living space. Pe...
65 Vanderhorst Street UNIT Apt F
Charleston, SC 29403
Radcliffeborough
Residential
MLS# 26019048 / Active
Nestled in the heart of Radcliffeborough, this charming two-story condominium blends historic Charleston character with modern convenience. Built i...
329 Hickory Nut Way
Cross, SC 29436
Residential
MLS# 26019043 / Active
Welcome to this stunning, brand-new 4-bedroom, 3-bathroom manufactured home offering over 2,000 square feet of comfortable, modern living space. Pe...
265 Pickens Street
Summerville, SC 29485
Lincolnville
Residential
MLS# 26019042 / Active
NEW construction home located about 5 minutes just south of downtown Summerville, in the quiet community of Lincolnville. This 3 bedroom/2.5 bath h...
113 Deer Street
Summerville, SC 29485
Woodland Estates
Residential
MLS# 26019038 / Active
***Ask about the possibility of receiving 1% reduction in interest rate and free refi.*** Situated on more than an acre in a peaceful Summerville s...
379 McClure Lane
Walterboro, SC 29488
Residential
MLS# 26019037 / Active
Welcome Home to 379 McClure Lane! Nestled on a beautifully manicured 0.90-acre lot, this exceptional Cape Cod-style brick home offers approximately...
6 Catfiddle Street
Charleston, SC 29403
City Of Charleston
Residential
MLS# 26019034 / Active
Experience the pinnacle of downtown Charleston living in this exceptional new construction residence, masterfully designed by architect Randolph Ma...
2250 Myrtle Avenue
Sullivans Island, SC 29482
Residential
MLS# 26019033 / Active
Introducing a rare opportunity to own a thoughtfully designed proposed construction estate where Sullivan`s Island history and modern luxury come t...
241 Celestial Boulevard
Summerville, SC 29486
Cane Bay Plantation
Residential
MLS# 26019032 / Active
Welcome home to this stunning 5-bedroom, 3.5-bath residence in the highly sought-after Cane Bay community, where exceptional living meets incredibl...
1141 Oakcrest Drive
Charleston, SC 29412
Willow Walk
Residential
MLS# 26019027 / Active
Renovated kitchen stainless steel appliances, 42`` cabinets and granite. New master suite 2023 with custom bathroom, shower, enormous walk in close...
2029 Saint Francis Street
North Charleston, SC 29405
Five Mile Court
Residential
MLS# 26019026 / Active
This charming 3-bedroom, 2-bath home has been completely renovated offering modern updates, low-maintenance living, and an excellent location in on...
Reduced -$14,000
2881 Thunder Trail
Johns Island, SC 29455
Summertrees
Residential
MLS# 26019025 / Active
Tucked away on a quiet cul-de-sac in the established Summertrees neighborhood, this charming 3BR/2BA single-level home offers an inviting blend of ...
925 Edding Creek Drive
Edisto Island, SC 29438
Beckett Plantation
Residential
MLS# 26019024 / Active
``MARSTON``- An Island Creekfront Home designed by renowned Columbia architect RW Molten & crafted by Walter Construction. Features include 3-Story...
100 Autumn Lane
Moncks Corner, SC 29461
Windwood I & II
Residential
MLS# 26019023 / Active
Country retreat with unbeatable convenience -- the best of both worlds. This spacious 4-bedroom home offers a smart, comfortable layout perfect for...
228 Crosswick Street
Summerville, SC 29483
Pineland Preserve
Residential
MLS# 26019022 / Active
The Peachtree at Pineland Preserve offers exceptional living on a beautiful pond homesite. The first-floor primary suite features a stunning boxed ...
404 Marion Road
Dorchester, SC 29437
Residential
MLS# 26019021 / Active
NO SHOWINGS UNTIL AFTER WEDNESDAY, JULY 8, 2026. 2022 (32x66) South Bell Modular home situated on 5 acres of land. If you want country living, you ...
5140 Blackberry Lane
Ravenel, SC 29470
Tea Farm
Residential
MLS# 26019020 / Active
Meet the Hartwell, where thoughtful design meets effortless everyday living. This four-bedroom home balances privacy and togetherness with a split-...
Reduced -$2,000
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