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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482 Stanley Avenue
Walterboro, SC 29488
Residential
MLS# 26018522 / Active
THIS IS A ONE + - ACRES LOT WITH A 1552 SQFT HOME, THAT IS LOCATED AT 482 STANLEY AVE IN WALTERBORO, SC. NEED SOME TLC. IT HAS THREE BEDROOMS, TWO ...
407 Pompano Road
Edisto Island, SC 29438
Residential
MLS# 26018519 / Active
Welcome to your Edisto Island escape! Majestic live oaks and swaying palmettos frame this beautifully updated 3BR/2BA coastal retreat on the 4th ro...
116 Curico Lane
Summerville, SC 29483
Plum Creek
Residential
MLS# 26018513 / Active
Tucked away on a quiet cul-de-sac and backing to a wooded buffer for added privacy, this beautifully updated 5-bedroom home offers the perfect blen...
2618 Kiln Creek Circle
Mount Pleasant, SC 29466
Rivertowne Country Club
Residential
MLS# 26018508 / Active
In Rivertowne, beneath a canopy of palms and mature trees, this Lowcountry home welcomes you with peaceful marsh views that extend toward the Wando...
536 Lesesne Street
Charleston, SC 29492
Daniel Island Park
Residential
MLS# 26018507 / Active
RARE FULL GOLF ATTACHED- CUT THE 10 year wait!! Enjoy Daniel Island living at its best in this custom Ralston Grove home with a large fenced yard, ...
54 Wentworth Street UNIT Apt 9
Charleston, SC 29401
Ansonborough
Residential
MLS# 26018503 / Active
Don`t miss this opportunity to own a condo in the ideally located heart of downtown Charleston. This 1-bed, 1-bath unit has wood floors throughout ...
1175 Lazy Lane
Mount Pleasant, SC 29464
Old Georgetown Crossing
Residential
MLS# 26018502 / Active
Live your best life at 1175 Lazy Lane, a beautifully updated retreat in the heart of coveted 29464. Just minutes from Shem Creek`s waterfront dinin...
3701 Docksite Road UNIT #304
Edisto Beach, SC 29438
Bay Creek Villas
Residential
MLS# 26018498 / Active
Fully Renovated, Furnished & Ready to Enjoy at Bay Creek!Not all Bay Creek Villas are created equal, and this exceptional residence proves it. Situ...
222 Buckeye Lane
Summerville, SC 29486
Residential
MLS# 26018495 / Active
Charming Country Retreat with Space, Style & ConvenienceWelcome home to the perfect blend of peaceful country living and modern updates! Situated o...
Reduced -$20,000
2605 Coral Vine Court
Mount Pleasant, SC 29464
Seaside Farms
Residential
MLS# 26018492 / Active
Wonderfully well kept home on short cul-de-sac has an ambience that just needs to be seen. Upgrades of Hardiplank siding, solar panels, Generac Gen...
110 Mallock Court
Goose Creek, SC 29445
Crowfield Plantation
Residential
MLS# 26018489 / Active
Nestled on a quiet cul-de-sac in sought-after Crowfield Plantation, this spacious 5-bedroom, 2.5-bath home offers the perfect combination of comfor...
23 Charlyn Drive
Charleston, SC 29407
Northbridge Village
Residential
MLS# 26018487 / Active
Proudly situated at the end of a lovely cul-de-sac in Northbridge Village, 23 Charlyn Drive is a stately and spacious brick home offering a rare bl...
206 W Respite Lane
Summerville, SC 29483
Limehouse Village
Residential
MLS# 26018485 / Active
Welcome to this beautifully maintained 3 bedroom, 2.5 bath home built in 2019, offering a bright, neutral interior and a thoughtfully designed floo...
136 Dream Street
Summerville, SC 29483
Braeland
Residential
MLS# 26018483 / Active
Beautifully updated 4 bedroom, 2.5 Bath, open concept home. Fenced yard, protected wooded space behind property and open greenspace in front! Fresh...
Reduced -$1,100
157 High Hammock Villas
Seabrook Island, SC 29455
Seabrook Island
Residential
MLS# 26018481 / Active
An incredible opportunity awaits to own this beautifully renovated 2-bedroom, 2-bath, fully furnished ground-floor villa on Seabrook Island. Perfec...
195 Cypress Plantation Road
Moncks Corner, SC 29461
Strawberry Station
Residential
MLS# 26018480 / Active
Welcome to 195 Cypress Plantation, where everyday living feels a little more like a getaway. Featuring one of the community`s most sought-after flo...
106 True Blue Loop
Summerville, SC 29486
Nexton
Residential
MLS# 26018479 / Active
There`s a reason Nexton continues to be one of the Lowcountry`s most sought-after communities. More than just a beautiful home, 106 True Blue Loop ...
4803 E Red Maple Circle
Summerville, SC 29485
Wescott Plantation
Residential
MLS# 26018477 / Active
*NEW ROOF, NEW HVAC, New SOD in back yard, & many interior upgrades! One of the largest lots in Wescott!* Welcome home to 4803 East Red Maple Circl...
9002 Palmetto Drive UNIT #119
Isle of Palms, SC 29451
Wild Dunes
Residential
MLS# 26018475 / Active
Oceanfront at Seascape Villas | Wild Dunes, Isle of Palms - Coming Soon!Beachfront. Furnished. Income-producing. A turnkey 2-bed / 2-bath oceanfron...
3474 Stockton Drive
Mount Pleasant, SC 29466
Charleston National
Residential
MLS# 26018474 / Active
Welcome to Charleston National, one of Mount Pleasant`s most sought-after golf course communities, where Lowcountry living meets everyday convenien...
3 Judith Street
Charleston, SC 29403
Wraggborough
Residential
MLS# 26018471 / Active
Rare opportunity to own a historic Charleston home on an oversized lot in the heart of Wraggborough. Offering two bedrooms, an office space that co...
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