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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195 Tupalo Drive
Summerville, SC 29483
Summerville Farms
Residential
MLS# 26017590 / Active
Spacious Home on Half an Acre - No HOA!Tired of feeling on top of your neighbors? This home offers both space and privacy--a rare find that won`t l...
2331 Tall Sail Drive UNIT 804-D
Charleston, SC 29414
Seagate
Residential
MLS# 26017584 / Active
Enjoy the amenities and convenience of Seagate, one of West Ashley`s beautiful waterfront communities, complete with a community pool, boat slips, ...
Reduced -$10,001
753 Spring Highlands Drive
Summerville, SC 29486
Nexton
Residential
MLS# 26017583 / Active
A rare opportunity to own a beautifully customized Del Webb nearly new ``Renown``, showcasing luxury finishes, thoughtful upgrades, and effortless ...
411 Corey Boulevard
Summerville, SC 29483
Corey Woods
Residential
What is peace of mind worth in a home today? At 411 Corey Blvd, it`s already built in--and monthly payments stay in the low $2,300s.Estimated finan...
243 Lands End Drive UNIT #81
Charleston, SC 29407
Waterway South
Residential
MLS# 26017578 / Active
A special spot on the quiet side of Waterway South. Beautiful views from this Townhome located in the center of West Ashley. Walk in, and you are i...
1070 Lettered Olive Lane
Summerville, SC 29485
Summers Corner
Residential
MLS# 26017576 / Active
The Conyers Plan - This home offers one story living and is highly sought after for its large main living space, oversized front and back porches. ...
266 Oglethorpe Circle
Moncks Corner, SC 29461
Spring Grove Plantation
Residential
MLS# 26017574 / Active
Y`all... this home has been refreshed from top to bottom! Step inside to an inviting open-concept floor plan featuring new flooring, fresh paint, n...
113 Ingleside Drive
Summerville, SC 29486
Carnes Crossroads
Residential
MLS# 26017571 / Active
This spacious two-story home features an open layout among the dining room, kitchen and family room with access to the covered porch. In addition t...
199 High Grove Road
Summerville, SC 29485
Ashborough East
Residential
MLS# 26017569 / Active
Welcome to the HIGHLY DESIRABLE Ashborough East community, known for its MATURE landscaping, SPACIOUS HOMESITES, and timeless appeal. Opportunities...
148 Beamon Loop
Summerville, SC 29486
Carnes Crossroads
Residential
MLS# 26017568 / Active
The Hayden is a lovely 1 1/2 story home with a beautiful front porch. Inside you`ll find a nice entryway with a spacious study with French doors. T...
Increase +$20,000
204 Magnolia Garden Drive
Summerville, SC 29483
Limehouse Village
Residential
Seller offering $15,000 in concessions! Well-maintained 4-bedroom, 3-bath home with freshly repainted exterior built in 2021, located in Limehouse ...
406 Bluebird Bend Street
Summerville, SC 29486
Carnes Crossroads
Residential
MLS# 26017566 / Active
Welcome to our new Villa Collection; introducing the Bennett-A! At the heart of this new almost 1,900 sq. ft. two-story home is a designated living...
Reduced -$4,350
18 Hillcreek Boulevard
Charleston, SC 29412
Crosscreek
Residential
MLS# 26017565 / Active
Discover this wonderful three-bedroom, two-bathroom brick ranch spanning 1250 SF in the heart of James Island! This amazing home sits on a spacious...
1737 Pinopolis Road
Moncks Corner, SC 29461
Residential
MLS# 26017563 / Active
Small scale, Grand scale living. That`s the definition of 1737 Pinopolis Road and it`s packed with potential. Nestled on over a quarter-acre on a s...
167 Cape Palmetto Point Trail
Edisto Island, SC 29438
The Neck
Residential
MLS# 26017562 / Active
Truly a rare find! Tucked away off a private drive, this one-acre Marshfront retreat in The Neck is the kind of property that doesn`t come around o...
479 Caledon Court
Johns Island, SC 29455
Indigo Grove
Residential
MLS# 26017560 / Active
FINAL 2 END UNITS! 30-year fixed rates as low as 4.99% for primary residences! Ideally located at the foot of the Maybank Hwy Bridge, this elegant ...
Reduced -$9,800
210 Grayson Street
Walterboro, SC 29488
Sunny Dell
Residential
MLS# 26017559 / Active
An abundance of recent updates has transformed this charming 1,703-square-foot brick ranch into a fresh, inviting, move-in-ready home. Offering 4 b...
1025 Riverland Woods Place UNIT Apt 708
Charleston, SC 29412
The Retreat At Riverland
Residential
MLS# 26017558 / Active
This luxury 2 bed/2bath condo is conveniently located in The Retreat of James Island just 10 minutes from Downtown Charleston and 5 minutes from Fo...
1000 Elk River Run
Summerville, SC 29485
Summers Corner
Residential
MLS# 26017557 / Active
The Litchfield! Our very popular 1 story, open concept plan is now being offered in phase 6 of Summers Corner Sweetgrass section! Being built on a ...
Reduced -$10,120
43 Ripplemoor Lane
Charleston, SC 29414
Shadowmoss
Residential
MLS# 26017550 / Active
Welcome to 43 Ripplemoor Lane in the highly desirable Shadowmoss Plantation community of West Ashley. This is a beautifully crafted custom built br...
5544 Alpine Drive
Summerville, SC 29483
The Summit
Residential
MLS# 26017541 / Active
Step into refined Southern living in this beautifully appointed executive home on a large .42 acre lot, with paid off solar panels, and an average ...
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