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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108 Stanford Court
Ladson, SC 29456
College Park
Residential
MLS# 26018808 / Active
Welcome to 108 Stanford Court, where indoor comfort meets exceptional outdoor living. This wonderfulproperty offers 4 bedrooms, 1.5 baths, eat in k...
96 Red Bluff Street
Summerville, SC 29483
Limehouse
Residential
Exceptional Kensington floor plan full of upgrades, offering an impressive blend of comfort, style, and functionality. The main-level owner`s suite...
898 Long Bluff Road
Summerville, SC 29486
Cane Bay Plantation
Residential
MLS# 26018802 / Active
Stunning End-Unit Townhome in Cane Bay | 4BR, Primary Suite, Resort AmenitiesWelcome to 836 Long Bluff Road in Pine Hills--one of the premier neigh...
128 Ashworth Drive
Summerville, SC 29486
Carnes Crossroads
Residential
MLS# 26018800 / Active
Welcome home to this better-than-new Jackson floor plan, perfectly positioned on a desirable corner lot directly across the street from Carnes Cros...
2625 Jenkins Point Road
Seabrook Island, SC 29455
Seabrook Island
Residential
MLS# 26018798 / Active
Nestled within the prestigious Jenkins Point Plantation section of Seabrook Island, this exceptional custom-built residence offers a rare combinati...
2512 Bennett Yard Road UNIT A, B, C
North Charleston, SC 29405
Green Grove
Residential
MLS# 26018796 / Active
Exceptional investment opportunity featuring three detached houses on one property, each offering the privacy of a single-family home with excellen...
1010 Elk River Run
Summerville, SC 29485
Summers Corner
Residential
MLS# 26018795 / Active
This Fanning, estimated for November 2026, sits on a corner homesite. You`ll notice double front porches, adding that Southern Charm! Inside you`ll...
219 Crosswick Street
Summerville, SC 29483
Pineland Preserve
Residential
MLS# 26018793 / Active
Complete in July/August! Welcome to the Lacey B plan, an upgraded five-bedroom and three-and-one- half-bathroom home with the primary suite conveni...
Increase +$4,000
2422 Highway 174
Edisto Island, SC 29438
Residential
MLS# 26018787 / Active
Completely Remodeled & Move-In Ready on 1.93 Acres - Just 7 Minutes from the Beach! Welcome to your own coastal retreat! This beautifully remodeled...
762 Clay Field Trail
Summerville, SC 29485
Summers Corner
Residential
MLS# 26018786 / Active
The Rutledge exudes Southern Charm! With 10` ceiling and 8` doors on the first floor, the Row series is sure to impress. First floor Owner`s Suite ...
Reduced -$4,000
1982 Irving Avenue
North Charleston, SC 29405
Union Heights
Residential
MLS# 26018785 / Active
This cozy home comes FULLY FURNISHED and would be a great turnkey furnished rental investment! It has been a profitable short-term rental for the l...
19 Sandcrab Court
Isle of Palms, SC 29451
Wild Dunes
Residential
MLS# 26018784 / Active
Welcome to 19 Sandcrab Ct, a just renovated beach cottage in Isle of Palms. This completely reimagined beach retreat is nestled in the exclusive ga...
175 Sea Oats Street
Summerville, SC 29485
Summers Corner
Residential
MLS# 26018783 / Active
Home ready in October. This new two-story home features a main level guest bedroom, while at the back is a shared open-concept layout made for seam...
1601 Hopeman Lane
Mount Pleasant, SC 29466
Charleston National
Residential
MLS# 26018780 / Active
Experience luxury, low-maintenance living in one of Mount Pleasant`s most desirable communities, Charleston National. Tucked away on a quiet cul-de...
640 Powder Horn Road
Dorchester, SC 29437
Residential
MLS# 26018779 / Active
City Cowboy bring your horse situated on 6.49 acres featuring front porch, screened back porch, deck, pool and detached Mother In Law cottage with ...
123 Medford Street
Summerville, SC 29486
Carnes Crossroads
Residential
MLS# 26018773 / Active
Welcome to Carnes Crossroads, where modern updates meet relaxed Lowcountry living in one of Summerville`s most desirable communities. This barely l...
Reduced -$25,000
8216 Jack Island Drive
Johns Island, SC 29455
Kiawah River
Residential
MLS# 26018772 / Active
Designed for effortless gathering and everyday living, this beautifully crafted four-bedroom, four-and-a-half-bath home combines timeless Lowcountr...
32 State Street
Charleston, SC 29401
French Quarter
Residential
MLS# 26018771 / Active
Welcome to 32 State Street, an extraordinary historic residence tucked away in the heart of Charleston`s coveted French Quarter. Originally built i...
182 Golfview Lane
Summerville, SC 29485
Legend Oaks Plantation
Residential
MLS# 26018770 / Active
This inviting end-unit condo offers scenic views of the 10th fairway at Legend Oaks Golf Course. Enjoy the peaceful golf course setting from your l...
190 Bee Tree Boulevard
Summerville, SC 29486
Cane Bay Plantation
Residential
MLS# 26018769 / Active
Beautiful Single-Level Home in Cane Bay | Pine Hills Pool Community + Modern DesignWelcome to 190 Bee Tree Blvd, located in the highly sought-after...
185 Beliks Way
Summerville, SC 29483
West Highland Acres
Residential
Set on a peaceful 2.43-acre property just 10 minutes from downtown Summerville, this spacious home offers the perfect blend of privacy, space, and ...
Reduced -$19,000
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