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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276 Whirlaway Drive
Moncks Corner, SC 29461
The Paddock At Fairmont South
Residential
MLS# 26018091 / Active
This gorgeous white farmhouse with black accents offers open-concept living, a spacious kitchen, and a private backyard with no rear neighbors. Bui...
Reduced -$4,000
1453 Cypress Court
Mount Pleasant, SC 29466
East Crossing
Residential
MLS# 26018090 / Active
Set on a peaceful cul-de-sac in Mt. Pleasant, 1453 Cypress Court offers buyers a truly move-in ready opportunity. This 2-bedroom, 2-bathroom home h...
86 Peppertree Lane
North Charleston, SC 29420
Pepperidge
Residential
MLS# 26018089 / Active
Calling All Investors! 86 Peppertree Lane is ready for a makeover/renovation. It`s located in the Pepperidge Subdivision! Home features two separat...
7532 Indigo Palms Way
Johns Island, SC 29455
Indigo Hall At Hope Plantation
Residential
Welcome to Indigo Hall, where refined design and effortless Lowcountry living come together in this brand-new residence. Thoughtfully designed with...
37 Seagrass Lane
Isle of Palms, SC 29451
Wild Dunes
Residential
MLS# 26018086 / Active
Behind the gates of Wild Dunes Resort in the highly sought-after Out Islands section, 37 Seagrass Lane offers an extraordinary opportunity to exper...
8800 Dorchester Road UNIT Unit 201
North Charleston, SC 29420
Villas At Charleston Park
Residential
MLS# 26018084 / Active
One floor ranch villa. Maintenance free living. @/2 bath wood floors Upgrades attached two car garage and patio with partial fence. Close to shoppi...
205 Confederate Street
Summerville, SC 29485
Residential
MLS# 26018082 / Active
Tucked beneath the trees on over an acre in Summerville, this property offers the kind of space and privacy that`s getting harder to find. With 4 b...
1083 Bennington Drive
Charleston, SC 29492
Cain Crossing
Residential
MLS# 26018081 / Active
Beautiful Townhouse in Cain CrossingNestled in the convenient Cain Crossing community, this beautifully maintained townhouse blends comfort, style,...
1181 Old Hwy 6
Cross, SC 29436
Residential
MLS# 26018080 / Active
Country living meets modern comfort on nearly 6 acres just 3 minutes from Lake Moultrie! This beautiful property features a 2022 Southern Farmhouse...
162 Spring Street UNIT E
Charleston, SC 29403
Cannonborough-Elliotborough
Residential
MLS# 26018076 / Active
Welcome to 162 Spring Street, Unit E -- where timeless Charleston character meets the comfort and ease of new construction. This detached 4-bedroom...
914 Ocean Boulevard
Isle of Palms, SC 29451
Residential
MLS# 26018075 / Active
Welcome to Casa Banana, one of Isle of Palms` most recognized oceanfront properties. Ideally positioned on a prime stretch of Ocean Boulevard just ...
162 Spring Street UNIT D
Charleston, SC 29403
Cannonborough-Elliotborough
Residential
MLS# 26018073 / Active
Step into timeless Charleston charm blended seamlessly with modern comfort at 162 Spring Street, Unit D. This 4-bedroom, 3-bathroom detached home o...
162 Spring Street UNIT B
Charleston, SC 29403
Cannonborough-Elliotborough
Residential
MLS# 26018070 / Active
Turnkey Charleston Condo, steps away from everything! There`s a reason Cannonborough-Elliotborough keeps showing up on every ``best of Charleston``...
162 Spring Street UNIT A
Charleston, SC 29403
Cannonborough-Elliotborough
Residential
MLS# 26018063 / Active
Fully furnished Short Term Rental, well under $1million downtown Charleston! Welcome to 162 Spring Street, Unit A, where location, charm, and flexi...
805 Andrea Lane
Hanahan, SC 29410
Otranto Station
Residential
MLS# 26018061 / Active
Downstair flat, 2 bedrooms, 2 full baths & back patio. Primary bath has remodeled shower & vanity area. Unit has new luxury vinyl plank flooring, n...
1277 Hermit Crab Way
Mount Pleasant, SC 29466
Dunes West
Residential
MLS# 26018059 / Active
Welcome home to 1277 Hermit Crab Way, a charming single-story residence tucked away in the highly desirable Whispering Marsh enclave of Dunes West....
Reduced -$15,000
1479 Long Grove Drive UNIT #204
Mount Pleasant, SC 29464
Seaside Farms
Residential
MLS# 26018058 / Active
This completely renovated 3-bedroom, 3-bath, corner-unit, second-floor condo delivers a stunning modern coastal interior, set against a serene pond...
150 Helena Park Drive
Summerville, SC 29486
Carnes Crossroads
Residential
MLS# 26018057 / Active
Welcome to 150 Helena Park! Experience Lowcountry living in one of Summerville`s most sought-after master-planned communities. This beautifully des...
109 O'Leary Circle
Summerville, SC 29483
Six Oaks
Residential
MLS# 26018053 / Active
** 4.99% ASSUMABLE VA LOAN** This is a beautiful primary bedroom downstairs home on a stunning pond homesite. This amazing home features 4 bedrooms...
Reduced -$3,500
114 Sea Oats Street
Summerville, SC 29485
Summers Corner
Residential
MLS# 26018050 / Active
This spacious two-story home features a formal dining room, butlers pantry, and study. Also including an open kitchen/living space with quick acces...
253 Tupelo Lake Drive
Summerville, SC 29486
Cane Bay Plantation
Residential
MLS# 26018049 / Active
This is the only lakefront homesite in the neighborhood with a private wooded backdrop, giving you privacy that can`t be added later. The home face...
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