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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561 Pointe of Oaks Road
Summerville, SC 29485
Legend Oaks Plantation
Residential
MLS# 26018337 / Active
Welcome to 561 Pointe of Oaks! Located in a sought-after golf course community and within the highly desirable DD2 school district, this beautifull...
124 Walnut Creek Road
Charleston, SC 29414
Grand Oaks Plantation
Residential
MLS# 26018336 / Active
Welcome to 124 Walnut Creek Road in the desirable Grand Oaks Plantation neighborhood. Offering 1665 square feet, this 3 bedroom 2.5 bath home is mo...
200 Equinox Circle
Ladson, SC 29456
Heatherwoods
Residential
MLS# 26018335 / Active
Thoughtfully updated and ideally positioned for both convenience and lifestyle, this exceptional 3-bedroom, 2.5-bath residence offers refined livin...
1056 Keats Road
Charleston, SC 29407
East Oak Forest
Residential
MLS# 26018333 / Active
Welcome to 1056 Keats Road, a charming brick home nestled in the heart of East Oak Forest. This inviting residence perfectly blends classic charact...
Reduced -$4,000
3512 Henrietta Hartford Road
Mount Pleasant, SC 29466
Park West
Residential
MLS# 26018331 / Active
Welcome to 3512 Henrietta Hartford Road, a beautifully maintained elevated home nestled in one of Mount Pleasant`s most desirable waterfront commun...
300 Blue Shadows Court
Summerville, SC 29486
Cane Bay Plantation
Residential
MLS# 26018330 / Active
Welcome to 300 Blue Shadows Court, a beautifully maintained home situated on a large, fully fenced corner lot in Summerville. From the inviting fro...
Reduced -$25,100
305 Elliott Drive
Ladson, SC 29456
Fairlawn
Residential
MLS# 26018328 / Active
Welcome home to this beautifully renovated 4 bedroom, 2 bath ranch-style home with NO HOA! Conveniently located just a few minutes away from shoppi...
269 Cooper River Drive
Mount Pleasant, SC 29464
Tides Condominiums
Residential
MLS# 26018327 / Active
Enjoy the panoramic views & sunsets overlooking the Wando River, Charleston Harbor, & Downtown Charleston from the private rooftop & balcony of thi...
504 Purple Finch Road
Summerville, SC 29486
Nexton
Residential
MLS# 26018326 / Active
Welcome to 504 Purple Finch Rd, a charming house in North Creek, NEXTON , Summerville, SC. The property features an open floor plan with spacious k...
639 Silver Spruce Street
Summerville, SC 29486
Cane Bay Plantation
Residential
MLS# 26018322 / Active
Welcome to Cane Bay`s highly sought after Pine Hills community! Built in 2022, this thoughtfully designed 5 bedroom, 2.5 bath home offers the perfe...
120 Evesham Drive
Summerville, SC 29485
Gahagan Plantation
Residential
MLS# 26018321 / Active
Completely renovated and perfectly located, this stunning home offers the best of Lowcountry living in the heart of Summerville. Just minutes from ...
7526 Indigo Palms Way
Johns Island, SC 29455
Indigo Hall At Hope Plantation
Residential
Welcome to your Dream Home in Indigo Hall! Experience modern living at its finest in this brand new 3-bedroom, 2-bathroom condo home in the newly c...
114 Northpark Avenue
Summerville, SC 29485
Summer Ridge
Residential
Welcome to 114 Northpark Avenue, your turn-key home where thoughtful updates, spacious living, and a private wooded backyard come together in one o...
198 Greenwich Drive
Summerville, SC 29486
Cane Bay Plantation
Residential
MLS# 26018314 / Active
Introducing the Macon floorplan, perfectly positioned on a private, wooded homesite where thoughtful design meets effortless Lowcountry living. Thi...
2200 Belle Isle Avenue UNIT #303
Mount Pleasant, SC 29464
One Belle Hall
Residential
MLS# 26018313 / Active
Recently renovated and completely turnkey, this top-floor corner residence offers 3 bedrooms, 2 bathrooms, and a one-car garage in one of Mount Ple...
110 Franklin Retreat Court
Charleston, SC 29492
Retreat At Beresford
Residential
MLS# 26018311 / Active
Welcome to the perfect blend of classic Charleston charm and modern updates, just minutes from Daniel Island. Tucked away at the end of a quiet cul...
Reduced -$5,000
270 Oglethorpe Circle
Moncks Corner, SC 29461
Spring Grove Plantation
Residential
MLS# 26018309 / Active
Welcome to 270 Oglethorpe Circle in Spring Grove Plantation. This one owner, move in ready home offers 3 bedrooms, 2.5 baths, and 1348 Sqft. of tho...
1022 Grace Field Avenue
Summerville, SC 29485
Summers Corner
Residential
MLS# 26018306 / Active
Move-in ready and beautifully maintained, this Drake floor plan in Horizons at Summers Corner offers 3 bedrooms, 2 bathrooms, and a private wooded ...
109 Sea Cotton Circle
Charleston, SC 29412
Seaside Plantation
Residential
Welcome to Seaside Plantation, one of James Island`s most sought-after communities! This charming 3-bedroom, 2-bath home offers approximately 1,250...
9737 Table Mountain Lane
Ladson, SC 29456
Coosaw Preserve
Residential
Searching for a 4-bedroom home in Coosaw Preserve with the flexibility of a potential fifth bedroom, over 3,300 square feet, modern upgrades, and a...
Reduced -$10,000
718 Triangle Lane
Summerville, SC 29486
Nexton
Residential
MLS# 26018302 / Active
Welcome to 718 Triangle Lane a truly one-of-a-kind home in the heart of Midtown Nexton where thoughtful design, luxury finishes, and effortless ind...
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