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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1502 Royal Colony Road
Johns Island, SC 29455
The Gates Of Fenwick Plantation
Residential
MLS# 26017941 / Active
Welcome to The Gates at Fenwick Plantation! This move-in-ready corner-unit condo offers privacy, convenience, and low-maintenance living in a sough...
2411 Kemway Road
Johns Island, SC 29455
Stono Pointe
Residential
MLS# 26017940 / Active
Nestled beneath grand oaks and framed by nearly 3.9 acres of native Lowcountry landscape, this private Stono Pointe retreat feels worlds away while...
8329 Longridge Road
North Charleston, SC 29418
Appian Landing
Residential
MLS# 26017939 / Active
Welcome to this beautiful 3-bedroom, 2-bath home in the desirable Appian Landing community, offering an inviting layout, stylish finishes, and a co...
102 Antebellum Way
Summerville, SC 29483
Southern Magnolias
Residential
MLS# 26017938 / Active
This adorable Charleston style home is located in the highly sought after DD2 School District on the outskirts of Historic Summerville.. Approx 15m...
1322 Rosewood Lane
Mount Pleasant, SC 29464
Southampton Pointe
Residential
MLS# 26017937 / Active
Welcome to one of the best opportunities in Mount Pleasant`s most desirable zip code - 29464! This beautifully maintained home combines an open, li...
1413 River Front Drive
Charleston, SC 29407
Orange Grove Estates
Residential
MLS# 26017936 / Active
Wonderful layout with separate DR and LR and large family room off the kitchen. Three bedrooms upstairs. Large primary bedroom suite has tray ceili...
115 Wappoo Landing Circle UNIT #17
Charleston, SC 29412
Wappoo Landing
Residential
MLS# 26017933 / Active
Three miles from downtown Charleston one finds Wappoo Landing Townhomes - a quiet 23 unit community along the banks of Wappoo Creek. Designed for r...
3204 Fort Street
Edisto Island, SC 29438
Edisto Beach
Residential
MLS# 26017932 / Active
Welcome to The Fort, a beautifully renovated fully furnished 3-bedroom + bunk room, 3.5 bath coastal retreat in Edisto`s quietest and most desirabl...
213 Killarney Trail
Moncks Corner, SC 29461
Foxbank Plantation
Residential
MLS# 26017931 / Active
Seller Offering $7,500 in Buyer`s Concessions with an Acceptable Offer! Flexible floor plan featuring two main-level bedrooms and a private second-...
415 True North Trail
Summerville, SC 29486
Cane Bay Plantation
Residential
MLS# 26017929 / Active
Experience lake life in The Coves at Cane Bay Plantation! This beautiful 5-bedroom, 3.5-bath Kensington floor plan features double front porches, a...
5150 Monterey Street
North Charleston, SC 29405
Park Circle
Residential
MLS# 26017927 / Active
Welcome to the 3 bedroom 2 bath single family home, a charming brick ranch situated on a nearly quarter-acre lot in one of Park Circle`s most desir...
295 Citrus Drive
Summerville, SC 29486
Carnes Crossroads
Residential
MLS# 26017926 / Active
Welcome to 295 Citrus Drive, a beautifully maintained Charleston Single-style home situated on a desirable corner homesite in Carnes Crossroads, sh...
2931 Waterleaf Road
Johns Island, SC 29455
Whitney Lake
Residential
MLS# 26017924 / Active
This may be the home for you! This fabulous home is a combination of style, class and comfort! And it`s located lakefront in desirable Whitney Lake...
8047 Old London Road
North Charleston, SC 29406
Park Hill Place
Residential
MLS# 26017923 / Active
Large two-story home in desirable Park Hill Place featuring over 2200 sq feet in a non flood zone is ready for new owners! Downstairs, a separate d...
415 Parkdale Drive UNIT Apt 2f
Charleston, SC 29414
Carolina Cove
Residential
MLS# 26017922 / Active
Beautifully updated and move-in ready, this charming condo is being offered fully furnished--including all artwork, furnishings, and accessories--a...
Reduced -$9,000
432 Allamby Ridge Road
Moncks Corner, SC 29461
Spring Grove Plantation
Residential
Rarely does a home offer this much space, versatility, and value. Featuring 6 bedrooms, 3 full baths, and an exceptional floor plan, this beautiful...
1066 Dusk Drive
Summerville, SC 29486
Nexton
Residential
MLS# 26017919 / Active
Welcome to 1066 Dusk Drive, a beautifully designed new construction two story villa by Ashton Woods located in the highly sought after Hammock Walk...
Reduced -$20,000
1068 Dusk Drive
Summerville, SC 29486
Nexton
Residential
MLS# 26017917 / Active
Welcome to 1068 Dusk Drive, a beautifully designed new construction end unit villa by Ashton Woods located in the highly sought after Hammock Walk ...
Reduced -$20,000
441 Whispering Breeze Lane
Summerville, SC 29486
Cane Bay Plantation
Residential
MLS# 26017915 / Active
Welcome to this beautifully maintained home nestled on a private, wooded lot! The main floor features an inviting foyer, a spacious living room, an...
18 Stocker Drive
Charleston, SC 29407
Windermere
Residential
MLS# 26017914 / Active
Charming brick home on a quiet family street that is located close to Downtown Charleston, soon to be walkable or bikeable to the Peninsula via a n...
Reduced -$45,000
5303 Alvie Street
North Charleston, SC 29418
Glyn Terrace
Residential
MLS# 26017912 / Active
This is the nicest property in North Charleston under $400,000! From the moment you pull into the driveway, the attention to detail is clear and co...
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