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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903 Elm Hall Circle
Summerville, SC 29483
Summer Wood
Residential
MLS# 26017791 / Active
Welcome to this beautifully maintained townhome offering a functional layout, low-maintenance living, and desirable community amenities. The main l...
1755 Central Park Road UNIT #5307
Charleston, SC 29412
Regatta On James Island
Residential
MLS# 26017789 / Active
Welcome to Regatta on James Island, one of the area`s most desirable gated condo communities! Ideally located less than 5 miles to Downtown Charles...
1 Ducs Court
Charleston, SC 29403
Eastside
Residential
MLS# 26017787 / Active
Welcome to 1 Ducs Court, a fabulous opportunity to live in historic downtown Charleston and enjoy the walkability of this vibrant and bustling urba...
126 Marion Road
Summerville, SC 29486
Sangaree
Residential
MLS# 26017786 / Active
Buyer got cold feet and cancelled the contract prior to completing their due diligence. Back on the market at no fault of the seller! Welcome home ...
1035 Lakeview Drive
Mount Pleasant, SC 29464
The Groves
Residential
MLS# 26017785 / Active
Welcome Home to 1035 Lakeview Drive | The Groves | Mount PleasantTucked away on one of the most desirable streets in the highly sought-after Groves...
921 Main Street
Charleston, SC 29407
Ashleyville
Residential
West Ashley`s best kept secret! Gorgeous New Construction this close to the waterfront parks. X Flood zone. Step up to a classic full front porch a...
Reduced -$10,100
527 Nelliefield Trail
Wando, SC 29492
Nelliefield Plantation
Residential
MLS# 26017782 / Active
A golf cart or bike ride away from Point Hope without those prices! An impeccable two-story, this home offers an inviting, open layout for every da...
Reduced -$10,000
411 Forest Circle
Summerville, SC 29483
Oakdale Estates
Residential
MLS# 26017779 / Active
NO HOA. OVERSIZED LOT. UPDATED MAJOR SYSTEMS. ROOM FOR YOUR BOAT, WORKSHOP, OR FUTURE POOL.Updated with a 2020 roof, 2021 HVAC, and 2021 water heat...
4228 Oakridge Drive
North Charleston, SC 29418
Glyn Terrace
Residential
MLS# 26017778 / Active
nicely appointed 4 bed 2 bath Fully remodeled brick ranch to include new roof soffit, fascia, HVAC, kitchen, quartz counter tops, modern sink, face...
Reduced -$10,000
2001 Long Bend
Seabrook Island, SC 29455
Seabrook Island
Residential
MLS# 26017776 / Active
Renovated End Unit with Marsh Views. Excellent short-term rental potential in a desirable island setting. The open living and dining area flows to ...
5027 Barrier Island Court
Mount Pleasant, SC 29466
The Bluff at Charleston National
Residential
MLS# 26017775 / Active
BACK ON THE MARKET AT NO FAULT OF THE SELLERS! READY TO SHOW! One of the most desirable waterfront homesites on Copahee Sound.This custom waterfron...
4615 O'Hear Avenue
North Charleston, SC 29405
Park Circle
Residential
MLS# 26017774 / Active
Located in Park Circle`s charming historic district and walkable to dinner or drinks down the block on E Montague, this little bungalow checks a lo...
206 Clifton Street
Summerville, SC 29483
Historic District
Residential
MLS# 26017773 / Active
Nestled in the heart of the coveted Summerville Historic District, 206 Clifton Street offers a rare opportunity to own an extraordinary estate wher...
2494 Etiwan Avenue UNIT B9
Charleston, SC 29414
Melrose Park Townhomes
Residential
MLS# 26017769 / Active
Why pay more. Compare and you`ll agree this is a bargin. This affordable townhome is ready now. Compare and you will see. It was recently painted a...
Reduced -$2,400
400 Barreling Court
Moncks Corner, SC 29461
Spring Grove Plantation
Residential
MLS# 26017768 / Active
Welcome to 400 Barreling Court, a home that feels better than new! This 4-bedroom, 2.5-bath gem features a master bath with his and hers vanities, ...
Reduced -$9,000
130 Cornell Drive
Ladson, SC 29456
College Park
Residential
MLS# 26017766 / Active
Welcome home to this beautifully well maintained 4-bedroom ranch in Ladson, SC, ideally located near Goose Creek and Summerville--perfect for buyer...
1327 Headquarters Plantation Drive
Johns Island, SC 29455
Headquarters Plantation
Residential
MLS# 26017764 / Active
Gorgeous executive home on a .48 acre lot with an in-ground pool on Headquarters Plantation Island. Surrounded by the Stono River, this lovely comm...
109 Carriage Court
Summerville, SC 29486
Sangaree
Residential
MLS# 26017762 / Active
Welcome to this charming 4-bed home situated at the end of a quiet cul-de-sac. This property combines classic character with comfortable updates th...
408 Dovetail Circle
Summerville, SC 29483
Weatherstone
Residential
MLS# 26017758 / Active
Welcome home to 408 Dovetail Circle, a charming traditional-style residence nestled in the highly sought-after Weatherstone community of Summervill...
Reduced -$10,000
666 Poaug Lane
Mount Pleasant, SC 29464
Fox Pond
Residential
MLS# 26017757 / Active
666 Poaug Lane is a single-story 3-bedroom, 2-bath cottage on a high corner lot in the heart of Mount Pleasant`s Old Village and one of Charleston`...
Reduced -$30,100
1040 Grace Field Avenue
Summerville, SC 29485
Summers Corner
Residential
MLS# 26017756 / Active
Welcome to resort-style living in the sought-after Horizons 55+ community at Summers Corner. This like-new Lennar Hampton home offers 1,503 sq ft o...
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