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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300 Autumn Azalea Way
Summerville, SC 29486
Nexton
Residential
MLS# 26017749 / Active
Beautiful Martin Ray home featuring 3 bedrooms, 3 baths, a French door office, upstairs loft, three-bay garage, and three season room on a private ...
2325 Brackish Drive
Mount Pleasant, SC 29466
Dunes West
Residential
MLS# 26017748 / Active
Luxury Meets Waterfront Serenity in Gated Dunes West.Experience the pinnacle of low country living in this timeless, masterfully crafted John Wiela...
932 Tall Pine Road
Mount Pleasant, SC 29464
The Groves
Residential
MLS# 26017747 / Active
Welcome to 932 Tall Pine Road, an inviting two-story home in The Groves, one of South Mount Pleasant`s most established and sought-after neighborho...
1319 Lucinda Street
Mount Pleasant, SC 29466
Copahee View
Residential
MLS# 26017746 / Active
Welcome to 1319 Lucinda Street, where modern design, Lowcountry charm, and an unbeatable Mount Pleasant lifestyle come together in one exceptional ...
113 Aldene Avenue
Goose Creek, SC 29445
Sedgefield Section I
Residential
Don`t miss this rare opportunity to own what feels like a brand-new home in the heart of Goose Creek! Originally rebuilt down to the studs, this 3 ...
312 Charleston Boulevard
Isle of Palms, SC 29451
Isle Of Palms
Residential
MLS# 26017740 / Active
Proven Income-Producing Beach Retreat | $140,000 Net Rental Income in 2025A rare opportunity to own a beautifully updated Isle of Palms beach home ...
104 Willis Lane
Summerville, SC 29483
Historic District
Residential
MLS# 26017739 / Active
Call your contractor & reserve your designer! Coveted homesites like 104 Willis Lane don`t come to market often. As priced, you have the opportunit...
686 Pelzer Drive
Mount Pleasant, SC 29464
Cooper Estates
Residential
MLS# 26017737 / Active
Located in the sought-after Cooper Estates, 686 Pelzer Drive offers a rare opportunity in one of Mount Pleasant`s most established neighborhoods. O...
105 Rambling Lane
Cross, SC 29436
Residential
MLS# 26017736 / Active
Are you looking for a home that is on a meaningfully large piece of land with room to grow into? Perhaps you have lots of toys you need to store or...
Reduced -$4,000
517 Spring Hollow Drive
Charleston, SC 29492
The Marshes At Cooper River
Residential
MLS# 26017735 / Active
Built in 2023, this elevated Lowcountry home in The Marshes at Cooper River offers pond views and partial Cooper River views from a quiet, private ...
2528 Bent Tree Lane
Mount Pleasant, SC 29464
Seaside Farms
Residential
MLS# 26017734 / Active
This raised single family home is located in peaceful Seaside Farms close to the beaches of Isle of Palms and the amazing Shoppes of Seaside, inclu...
206 Elmwood
Ladson, SC 29456
Oakmont
Residential
MLS# 26017733 / Active
This Ladson property presents a solid value-add opportunity in a convenient area. The home is being offered for sale in as-is condition, making it ...
Reduced -$3,996
1016 Toadfish Run
Summerville, SC 29485
Summers Corner
Residential
MLS# 26017732 / Active
Discover HORIZONS, a place where you can wake up with countless opportunities but no commitments. Where new friends share stories, ideas and advent...
608 Palm Boulevard
Isle of Palms, SC 29451
Residential
MLS# 26017731 / Active
This Spanish-inspired home is one of the most unique residences on the island and a designer`s dream, created by architect Carl McCants of MC3 Desi...
764 Creekside Drive
Charleston, SC 29412
Lighthouse Point
Residential
MLS# 26017729 / Active
Welcome to your updated waterfront retreat in the desirable Lighthouse Point community on James Island. Situated along Parrot Point Creek, this bea...
1116 Razor Clam Way
Summerville, SC 29485
Summers Corner
Residential
MLS# 26017728 / Active
Discover HORIZONS, a place where you can wake up with countless opportunities but no commitments. Where new friends share stories, ideas and advent...
Increase +$1,000
843 Trent Street
Charleston, SC 29414
Melrose
Residential
MLS# 26017725 / Active
Welcome to 843 Trent Street, a beautifully renovated Charleston retreat tucked away on a quiet dead-end street in one of West Ashley`s most conveni...
Reduced -$17,000
1575 Brownswood Road
Johns Island, SC 29455
Residential
MLS# 26017724 / Active
Located on a beautiful homesite of over a quarter acre in the heart of Johns Island, this newly built semi-custom home combines modern design, thou...
667 Serotina Court
Mount Pleasant, SC 29464
Wakendaw East
Residential
MLS# 26017723 / Active
Welcome to Wakendaw East located in the heart of South Mount Pleasant. This Traditional Style home sits just minutes from shopping, dining, and the...
222 Seaworthy Street
Summerville, SC 29486
Cane Bay Plantation
Residential
MLS# 26017722 / Active
Set on a beautiful pond lot, this spacious home offers more than meets the eye with 5 bedrooms and 3.5 baths. The thoughtfully designed layout incl...
Reduced -$19,888
2512 Hummingbird Lane
Summerville, SC 29483
Pine Forest
Residential
MLS# 26017721 / Active
Located in the highly sought-after Pine Forest Country Club community, 2512 Hummingbird offers the rare opportunity to own a home that feels comple...
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