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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5077 Song Sparrow Way
Summerville, SC 29483
The Ponds
Residential
MLS# 26018001 / Active
Welcome to 5077 Song Sparrow Way, located in the highly sought-after 55+ community of Cresswind at The Ponds! Perfectly situated on one of the comm...
1005 Bald Cypress Drive
Moncks Corner, SC 29461
Fairmont South
Residential
MLS# 26018000 / Active
The Eastland 3-story floor plan by Lennar is a beautiful plan with lots of curb appeal with the brick front, large front porch and windows. Upon en...
4319&4317 Davison Road
Ravenel, SC 29470
Residential
MLS# 26017999 / Active
The sales price includes both homes located at 4319 and 4317.Calling all investors and short-term rental visionaries--this is a rare, fully turnkey...
1016 Maidstone Drive
Summerville, SC 29483
Pine Forest Country Club
Residential
MLS# 26017998 / Active
***Ask about the possibility of receiving 1% reduction in interest rate and free refi.*** Located on a spacious corner lot in the Pine Forest Count...
Reduced -$15,000
8 Islington Court
Charleston, SC 29403
Cannonborough-Elliotborough
Residential
Don`t miss this unique chance to own a beautifully positioned home on a private street just steps from MUSC and Charleston`s best local dining. Sol...
411 Cropfield Drive
Summerville, SC 29485
Limehouse Farms
Residential
MLS# 26017990 / Active
This 5-bedroom home, plus an office and bonus room, sits on the best lot in the neighborhood! This like-new home is situated near two ponds and pro...
213 Clearblue Loop
Summerville, SC 29486
Nexton
Residential
MLS# 26017983 / Active
Welcome to 213 Clearblue Loop, a beautifully designed home in the highly desirable Midtown at Nexton community, perfectly positioned in a completed...
Reduced -$10,000
4923 Steeplechase Lane
Hollywood, SC 29449
Stono Ferry
Residential
MLS# 26017982 / Active
A unique offering just outside of Charleston, SC for a Lowcountry estate situated on approximately 2.3 beautifully landscaped acres offering expans...
303 Ayers Circle
Summerville, SC 29485
Salisbury Acres
Residential
MLS# 26017981 / Active
Welcome to this stunning, renovated brick ranch nestled in one of Summerville`s best-kept secrets -- Salisbury Acres. Tucked away on a spacious .56...
Reduced -$11,000
224 Rodenberry Road
Cross, SC 29436
Residential
MLS# 26017977 / Active
Spacious 4-bedroom, 3-bath home situated on a private 1-acre lot in the Cross area of Berkeley County. Offering approximately 2,288 square feet of ...
7961 Shadow Oak Drive
North Charleston, SC 29406
Oak Bluff
Residential
MLS# 26017976 / Active
Conveniently located near Charleston Southern University, Trident Technical College, Joint Base Charleston, Charleston International Airport, North...
14 Lockwood Drive UNIT 7abg
Charleston, SC 29401
Ashley House
Residential
MLS# 26017971 / Active
Experience one of downtown Charleston`s most unique residences. Created by combining three separate units into one expansive home, totaling 2300 sq...
146 Callibluff Drive
Summerville, SC 29486
Carnes Crossroads
Residential
MLS# 26017970 / Active
Welcome to 146 Callibluff Drive, where custom design meets real-life functionality in one of the most sought-after sections of Carnes Crossroads. T...
270 Village Stone Circle
Summerville, SC 29486
Marrington Villas At Cobblestone
Residential
MLS# 26017968 / Active
Welcome home to this adorable, low-maintenance 2-bedroom, 2-bath residence situated on a desirable corner lot. This charming home features an open-...
Reduced -$5,100
1224 Creek Stone Way
Hanahan, SC 29410
Tanner Plantation
Residential
MLS# 26017965 / Active
Welcome to Tanner Plantation, one of Hanahan`s most sought-after communities! This beautifully maintained 4-bedroom, 2.5-bath home offers 2,678 squ...
4327 Carolina 165
Meggett, SC 29449
Residential
MLS# 26017963 / Active
Investor Special in the heart of Younges Island! Situated on a generous .43-acre lot, this property offers a rare opportunity to own a sizable piec...
Reduced -$34,900
111 Corvus Court
Summerville, SC 29486
Cane Bay Plantation
Residential
MLS# 26017961 / Active
Located in the Pender Woods community of Summerville, this lovely single-level, 4 bd home offers a functional layout, thoughtful upgrades, and a co...
406 Wood Lilly Lp
Summerville, SC 29486
Nexton
Residential
MLS# 26017957 / Active
Welcome to the Wando by Saussy Burbank, a beautifully upgraded 3,200sf home in sought-after Nexton Midtown ready in September. This spacious floor ...
1011 Harrison Road
Ladson, SC 29456
North Tranquil Acres
Residential
MLS# 26017951 / Active
Welcome home to this charming, well maintained property located in the established North Tranquil Acres neighborhood of Ladson!Big back yard with p...
Reduced -$15,000
2001 Carriage Way
Summerville, SC 29485
Legend Oaks Plantation
Residential
MLS# 26017948 / Active
Welcome home to this beautifully maintained all-brick residence situated on a desirable corner lot at the end of a quiet cul-de-sac. Combining time...
314 Garden Grove Drive
Summerville, SC 29485
Bridges Of Summerville
Residential
MLS# 26017942 / Active
Hurry and take this rare opportunity to own your single family home in the midst of Summerville, at a discount! Needs to move fast, this home requi...
Reduced -$3,000
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