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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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 ...
222 Savannah River Drive
Summerville, SC 29485
Lakes Of Summerville
Residential
MLS# 26017536 / Active
This inviting property truly checks all the boxes! It is a beautifully maintained one story home on a prime lot overlooking a serene pond. Features...
Reduced -$3,000
4633 Forest Hills Drive UNIT #1003
North Charleston, SC 29418
North Charleston
Residential
MLS# 26017535 / Active
Welcome to Homesite 37 at Clear Springs Townhomes, a thoughtfully designed three-story townhome offering 3 bedrooms, 3.5 bathrooms, and the perfect...
1802 Hopeman Lane
Mount Pleasant, SC 29466
Charleston National
Residential
MLS# 26017533 / Active
Beautiful luxury townhome located along the 5th fairway on the golf course in prestigious Charleston National. Enjoy incredible golf course views a...
1404 Cimmaron Lane
Goose Creek, SC 29445
St. James Estataes IV
Residential
MLS# 26017528 / Active
NO HOA - Thoughtfully renovated since 2020, this beautifully updated home is a true gem in the heart of Goose Creek. Upgrades include new flooring ...
171 Airy Drive
Summerville, SC 29486
Cane Bay Plantation
Residential
MLS# 26017527 / Active
Move-in ready and beautifully upgraded, this 4-bedroom, 3-bathroom home offers 3,289 square feet of thoughtfully designed living space in the highl...
11 Wappoo Creek Place
Charleston, SC 29412
Wappoo Creek Place
Residential
MLS# 26017524 / Active
Look no further for the lifestyle we all love about Charleston. This condo is 5 minutes to downtown, tucked away in Wappoo Creek place with stunnin...
2333 Francis Marion Boulevard
Summerton, SC 29148
Residential
MLS# 26017523 / Active
Welcome to 2333 Francis Marion Blvd., where you can enjoy The Lake Life on a spacious .70-acre lot. This 4-bedroom, 2-bath home offers an inviting ...
5043 Spaniel Drive
North Charleston, SC 29405
Park Circle
Residential
MLS# 26017521 / Active
Welcome to this stunning 5 bed/2.5 bath home nestled on a cul-de-sac in the Park Circle community w/no HOA! The dramatic 2-story foyer opens to a f...
3337 Ethan Street
Mount Pleasant, SC 29466
Hamlin Plantation
Residential
MLS# 26017520 / Active
Welcome to 3337 Ethan Street in the heart of Hamlin Plantation. This beautifully updated 4-bedroom, 2.5-bath home offers 2,742 square feet of well-...
337 Millcreek Drive
Charleston, SC 29407
Air Harbor
Residential
MLS# 26017517 / Active
Seller is offering up to $10,000 in buyer flex money with an acceptable offer, which may be used toward closing costs, a rate buy-down, or helping ...
111 Lucky Day Drive
Summerville, SC 29486
Cane Bay Plantation
Residential
MLS# 26017513 / Active
Welcome to this beautiful four-bedroom, two-bath ranch built in 2021, located in the heart of Lindera Preserve.Situated on a quiet block, the home ...
606 Snow Owl Drive
Summerville, SC 29486
Nexton
Residential
MLS# 26017508 / Active
Incredible price on this modern two-story home offers a bright, open-concept main level perfect for seamless everyday living and entertaining. The ...
6199 Back Bay Drive
Isle of Palms, SC 29451
Wild Dunes
Residential
MLS# 26017503 / Active
Nestled within the exclusive gated community of Wild Dunes, this beautifully updated golf course residence offers privacy, comfort, and exceptional...
435 Jean Wells Drive
Goose Creek, SC 29445
Boulder Bluff
Residential
MLS# 26017499 / Active
Welcome to 435 Jean Wells Dr., a beautifully updated 3-bedroom, 1.5-bath home offering 1,027 square feet of comfortable living space. The open floo...
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