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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120 Bay Eddy Court
Summerville, SC 29485
Summers Corner
Residential
MLS# 26018556 / Active
Sellers are offering $5,000 towards the buyer`s closing costs. ***Ask about the possibility of receiving 1% reduction in interest rate and free ref...
35 Joggling Street
Mount Pleasant, SC 29464
Ion
Residential
MLS# 26018555 / Active
Situated in the award winning I`On neighborhood, at the end of Montrose Road, is this iconic Southern beauty with its distinguished and stately dou...
127 Manning Court
Summerville, SC 29485
Oak Ridge Place
Residential
MLS# 26018554 / Active
Low-maintenance living meets everyday convenience in this beautifully maintained one-story home tucked away on a quiet cul-de-sac in the heart of S...
3166 Vanessa Lynne Lane
Johns Island, SC 29455
Waterloo Estates
Residential
MLS# 26018553 / Active
READY NOW! Don`t miss the final Amberly floor plan in sought-after Waterloo Estates on Johns Island. This elevated home features vaulted ceilings, ...
7857 Montview Road
North Charleston, SC 29418
The Park At Rivers Edge
Residential
MLS# 26018551 / Active
*BRAND NEW CARPETS* *FRESH PAINT* *FENCED IN YARD* *CUSTOM LANDSCAPING*Beautifully maintained and move-in ready, this home offers the perfect blend...
Reduced -$8,000
8518 Sentry Circle
North Charleston, SC 29420
Indigo Palms
Residential
MLS# 26018548 / Active
Immaculate, move-in-ready 1-story open-plan home with 2-car garage on a quiet street in desirable Indigo Palms. A screened-in porch overlooks the w...
Reduced -$10,000
3423 Needwood Forest Drive
Johns Island, SC 29455
Staffordshire
Residential
MLS# 26018547 / Active
Welcome to the well-established and ideally located Staffordshire neighborhood on Johns Island. A covered front porch with a natural gas lantern gr...
9275 Blue Jay
Awendaw, SC 29429
Pamlico Terrace
Residential
MLS# 26018546 / Active
Welcome to Blue Jay Estates, a beautiful 3,064-square-foot, new-construction home fifteen minutes from Mount Pleasant, offering the perfect blend o...
107 Grant Street
Walterboro, SC 29488
Civic Center
Residential
MLS# 26018544 / Active
Beautifully renovated 3BR/2BA home with an adjoining lot included! This move-in ready home features a versatile bonus room currently set up as a mo...
Reduced -$1
1755 Central Park Road UNIT Unit 7313
Charleston, SC 29412
Regatta On James Island
Residential
MLS# 26018542 / Active
Top-floor living, resort-style amenities and one of James Island`s most convenient locations come together at Unit 7313 in The Regatta. This two-be...
218 Camellia Bloom Drive
Moncks Corner, SC 29461
Cypress Preserve
Residential
MLS# 26018538 / Active
Skip the wait and the builder-grade basics. This stunning 2-story Evans floor plan has been transformed with thousands of dollars in upgrades that ...
Reduced -$7,500
110 Ruston Place
Summerville, SC 29485
Crichton Parish
Residential
MLS# 26018537 / Active
Welcome to this well-maintained home tucked away on a cul-de-sac in the desirable Crichton Parish neighborhood. With no HOA, you`ll enjoy the freed...
331 Willow Pointe Circle
Summerville, SC 29486
Cane Bay Plantation
Residential
MLS# 26018536 / Active
Large house with over 3200 square feet. Just built in 2020. 6 nice size bedrooms with the primary downstairs. There are also 3 bathrooms. Open floo...
1329 Old Tabby Lane
Mount Pleasant, SC 29464
Eastwood Townhomes
Residential
MLS# 26018535 / Active
Nestled in highly sought-after South Mount Pleasant, this beautifully updated and meticulously maintained townhome offers the perfect blend of comf...
3255 Edenvale Road
Johns Island, SC 29455
Cane Slash
Residential
MLS# 26018534 / Active
Recently renovated, this versatile 1-acre Johns Island property offers endless possibilities with NO HOA! The spacious main home features updated f...
615 J and R Road
Johns Island, SC 29455
Residential
MLS# 26018533 / Active
Nestled on 2.27 private acres overlooking Simmons Tidal Creek with direct access to the Stono River, this beautifully designed 2023 custom home off...
Reduced -$49,000
5307 Cottage Landing Drive
Summerville, SC 29485
Watson Hill
Residential
MLS# 26018532 / Active
Welcome to the Glimmer Plan at Watson Hill; a welcoming one-story new construction home offering modern comfort. Inside, you`ll find granite counte...
5300 Cottage Landing Drive
Summerville, SC 29485
Watson Hill
Residential
MLS# 26018527 / Active
Welcome home to The Atlantis plan located on a wooded lot. The Atlantis is a 1 story new construction home with 3 bedrooms, 2 baths and spacious li...
7695 Picardy Place
North Charleston, SC 29420
Pepperhill
Residential
MLS# 26018526 / Active
Great price on the brick home in move in condition. New carpet and freshly painted. There are 3 good size bedrooms and 1 and 1/2 baths. Spacious op...
201 Hamlet Road
Summerville, SC 29485
Brandymill
Residential
MLS# 26018525 / Active
Picture yourself at 201 Hamlet Rd, recently updated with fresh interior paint throughout. The kitchen is equipped with all stainless steel applianc...
1436 Heather Drive
Mount Pleasant, SC 29464
Old Mt Pleasant
Residential
MLS# 26018523 / Active
Exceptional redevelopment opportunity in the heart of Old Mount Pleasant. Situated on a prominent corner lot spanning approximately 0.24 acres, thi...
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