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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414 Philbrick Drive
Goose Creek, SC 29445
Medway Landing
Residential
MLS# 26017668 / Active
Move-in ready and impeccably maintained, this stunning home in Medway Landing offers the perfect combination of space, comfort, and convenience. Fr...
2023 Hugo Avenue
North Charleston, SC 29405
Union Heights
Residential
MLS# 26017662 / Active
2023 Hugo Avenue is a beautifully renovated 2-bedroom, 2-bath home offering modern comfort, stylish finishes, and an unbeatable location in the hea...
2115 Kemmerlin Street
Johns Island, SC 29455
Oakfield
Residential
MLS# 26017661 / Active
Welcome to 2115 Kemmerlin Street, a stunning 4-bedroom, 3-bath home nestled on a premium, nearly quarter-acre lot on Johns Island. The expansive ba...
111 Comiskey Park Circle
Summerville, SC 29485
Fieldview
Residential
MLS# 26017659 / Active
Welcome to 111 Comiskey Park Circle, where charm, convenience, and location come together in one of Summerville`s most desirable areas. Nestled in ...
Reduced -$20,000
128 Fernbank Road
Johns Island, SC 29455
Rhetts Cove
Residential
MLS# 26017656 / Active
4.99% Fixed interest rate on FHA/VA loan or 5.5% Conventional buydown + 7500 in closing costs with use of our preferred lender and attorney!! Welco...
Reduced -$10,000
1723 W Avalon Circle
Charleston, SC 29407
Orange Grove Estates
Residential
MLS# 26017653 / Active
Welcome to your ultimate West Ashley retreat! Built in 2021, this stunning 4-bedroom, 3.5-bathroom home perfectly blends modern luxury with the rel...
2300 Minifarm Way UNIT #524
Mount Pleasant, SC 29466
Liberty Hill Farm
Residential
MLS# 26017652 / Active
Welcome to Liberty Hill Farm, where exceptional design, stunning views, and resort-style amenities come together in one of Mount Pleasant`s most so...
1984 Folly Road UNIT Apt B311
Charleston, SC 29412
Pelican Pointe Villas
Residential
MLS# 26017645 / Active
Location Location! Windows face the island and frame the lush treetop views maximizing privacy. This updated top-floor unit features an open layout...
933 McCants Drive
Mount Pleasant, SC 29464
Old Mt Pleasant
Residential
MLS# 26017643 / Active
Proposed New Construction in the Heart of Old Mt. PleasantAn exceptional opportunity to build your dream home in one of Mt. Pleasant`s most sought-...
1136 Razor Clam Way
Summerville, SC 29485
Summers Corner
Residential
MLS# 26017642 / Active
Discover HORIZONS, a place where you can wake up with countless opportunities but no commitments. Where new friends share stories, ideas and advent...
3051 Eventide
Johns Island, SC 29455
Kiawah River
Residential
MLS# 26017641 / Active
Overlooking Kiawah River`s working farm, this exceptional custom home showcases extraordinary craftsmanship and one-of-a-kind materials throughout....
8506 Falling Leaf Lane
North Charleston, SC 29420
Whitehall
Residential
MLS# 26017640 / Active
Completely renovated in 2024, this stunning 4 bed / 2.5 bath home in Whitehall checks every box. From top to bottom, no detail was overlooked -- ne...
1014 Toadfish Run
Summerville, SC 29485
Summers Corner
Residential
MLS# 26017639 / Active
Welcome to Horizons, a gated, 55+ active adult community situated in the highly desirable Summers Corner development. Residents will appreciate low...
110 Lipman Street
Summerville, SC 29483
Colonial Pines
Residential
MLS# 26017638 / Active
Welcome home to this beautifully updated 4-bedroom, 2.5-bath home in a convenient Summerville location! Enjoy charming curb appeal with an inviting...
226 Loblolly Circle
Ladson, SC 29456
Tall Pines
Residential
MLS# 26017634 / Active
Charming, move-in ready 3BR/2BA brick ranch with 1,368 sq ft in an established neighborhood with a convenient location near I-26. Features include ...
130 River Landing Drive UNIT Unit 5111
Charleston, SC 29492
Daniels Landing
Residential
MLS# 26017633 / Active
Check out the new updates: NEW CEDAR PRIMARY CLOSET SYSTEM, BRAND NEW WASHER, DRYER, NEW CEILING FANS/LIGHTS. FIRST FLOOR NO STAIRS POND & RIVER VI...
201 Ashley Avenue
Charleston, SC 29403
Cannonborough-Elliotborough
Residential
MLS# 26017628 / Active
A rare opportunity to own one of Charleston`s most distinctive hospitality properties, The Ashley Inn seamlessly blends historic grandeur, modern l...
1299 Old Towne Road
Charleston, SC 29407
Fairfield
Residential
MLS# 26017626 / Active
Nestled on 1.7 private acres and conveniently located just two miles from both the Ashley River Bridge and I-26 at Cosgrove Avenue, this exceptiona...
2685 Park West Boulevard
Mount Pleasant, SC 29466
Park West
Residential
MLS# 26017623 / Active
Welcome to 2685 Park West Boulevard, where style, comfort, and an unbeatable location come together in the heart of Park West`s highly desirable Ce...
428 White Scallop Way
Summerville, SC 29486
Shell Pointe At Cobblestone Village
Residential
Don`t miss this rare opportunity to assume the existing loan at an attractive 4.99% interest rate! Welcome to this charming single-story Glenwood f...
110 Feldman Court
Charleston, SC 29492
Beresford Pointe
Residential
MLS# 26017620 / Active
Lowcountry Living with Exceptional Water AccessDiscover a rare opportunity to own a custom-built home on a beautifully sized lot in an exclusive co...
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