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 Hickory Ridge Way
Summerville, SC 29483
Hickory Ridge
Residential
Welcome to 195 Hickory Ridge Way, a thoughtfully designed home offering the perfect blend of comfort, functionality, and modern style. The open-con...
Reduced -$5,000
3612 Bagley Drive
Mount Pleasant, SC 29466
Park West
Residential
MLS# 26017473 / Active
Enjoy the best of Park West living in this beautifully appointed Preston townhome with an ELEVATOR SHAFT overlooking a picturesque pond with wooded...
554 Tranquil Waters Way
Summerville, SC 29486
Cane Bay Plantation
Residential
MLS# 26017472 / Active
Welcome home - where comfort, style, and Lowcountry living come together in the gated 55+ community of Del Webb at Cane Bay. Set on a beautifully l...
612 Sienna Way
Summerville, SC 29486
Cane Bay Plantation
Residential
MLS# 26017470 / Active
Stunning 4-bedroom home on a beautiful pond lot with abundant natural light and exceptional indoor-outdoor living. The gourmet kitchen features qua...
Reduced -$24,000
717 Bounty Square Drive
Charleston, SC 29492
Beresford Hall
Residential
MLS# 26017465 / Active
You do not want to miss this rare opportunity to enjoy marsh views every day and beautiful sunsets every evening in a custom-built home in the exqu...
6 Vincent Drive
Mount Pleasant, SC 29464
Residential
MLS# 26017464 / Active
Welcome to 6 Vincent Drive located in the heart of South Mount Pleasant off Coleman Boulevard, just a short walk from Shem Creek, Starbucks, shoppi...
1068 Capersview Court
Awendaw, SC 29429
The Overlook at Copahee Sound
Residential
MLS# 26017463 / Active
Nestled in the heart of the Lowcountry, 1068 Capersview Court is a stunning showcase of thoughtful design and exceptional craftsmanship, where over...
226 Seaworthy Street
Summerville, SC 29486
Cane Bay Plantation
Residential
MLS# 26017456 / Active
Beautifully positioned on a peaceful pond homesite in the highly sought-after Cane Bay community, this thoughtfully designed home offers the perfec...
Reduced -$5
999 Scotch Bonnet Way
Summerville, SC 29485
Summers Corner
Residential
MLS# 26017455 / Active
The Elliot Plan- This traditional Charleston style home features a large front and rear, covered porches. The main living areas are complete with L...
Reduced -$8,750
441 Double Eagle Trace
Seabrook Island, SC 29455
Seabrook Island
Residential
MLS# 26017453 / Active
Private end-unit villa offering sweeping golf course views and bright, coastal-inspired interiors. The open-concept living and dining area features...
422 Colfax Lane
Summerville, SC 29486
Cane Bay Plantation
Residential
MLS# 26017452 / Active
BELTON A FLOORPLAN! Kitchen opens to casual dining area. Granite countertops, tiled backsplash, walk-in pantry & gas range & pre-wired pendant ligh...
1039 Red Turnstone Run
Summerville, SC 29485
Summers Corner
Residential
MLS# 26017451 / Active
The Palmetto - a perfect cottage feel! If you are downsizing or in need of a one story home this may be the plan for you! Large foyer leading to an...
Reduced -$5,000
1602 Rifle Range Road
Mount Pleasant, SC 29464
Lucker Terrace
Residential
MLS# 26017450 / Active
Step into this beautifully updated, move-in-ready home offering modern comforts and unbeatable convenience. Situated on a generous lot directly acr...
Increase +$50,000
1291 S Barksdale Road
Mount Pleasant, SC 29464
Wakendaw Lakes
Residential
MLS# 26017449 / Active
If you`re seeking a newer home within an established, highly desirable neighborhood, this one delivers. It is thoughtfully designed for low-key lux...
1315 Ridge Road
Ridgeville, SC 29472
Residential
MLS# 26017447 / Active
**BACK ON THE MARKET AND BETTER THAN EVER WITH A BRAND-NEW METAL ROOF INSTALLED IN JUNE 2026!** Discover the perfect blend of country charm, privac...
2312 Falcon Road
North Charleston, SC 29406
Wildwood
Residential
Great Opportunity in Prime North Charleston Location! This charming 3-bedroom, 1-bath home offers incredible potential in a highly convenient North...
Reduced -$10,000
2 McDonough Road UNIT C-10
Folly Beach, SC 29439
Mariners Cay
Residential
223 Hungerford Drive
Summerville, SC 29486
Cane Bay Plantation
Residential
MLS# 26017442 / Active
FINWOOD D FLOORPLAN! Open kitchen with granite countertops, tiled backsplash, walk-in pantry, microwave & gas range. Luxury Vinyl Plank on main flo...
202 Laurelhurst Lane
Johns Island, SC 29455
Rhetts Cove
Residential
MLS# 26017437 / Active
Estimated Delivery In December! The Jenkins at Rhetts Cove offers 1,957 square feet of flexible living space with 3 bedrooms, 2 full 2 half baths, ...
228 Hungerford Drive
Summerville, SC 29486
Cane Bay Plantation
Residential
MLS# 26017436 / Active
WINHAVEN 4/3.5. Open kitchen, large island, granite countertops, tile backsplash, huge walk-in pantry, pendant lights pre-wire, gas range, microwav...
2331 Tall Sail Drive UNIT 803-C
Charleston, SC 29414
Seagate
Residential
MLS# 26017435 / Active
This neighborhood is a hidden gem with beautiful views from the neighborhood marina. Being sold as-is, this condo boasts a storgage locker, Stainle...
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