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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759 Lake Frances Drive
Charleston, SC 29412
Lake Shore Commons
Residential
MLS# 26017434 / Active
Welcome to 759 Lake Frances Drive--a waterfront retreat where metropolitan sophistication meets the laid-back beauty of Charleston living. Tucked a...
2829 Captain Sams Road
Seabrook Island, SC 29455
Seabrook Island
Residential
MLS# 26017432 / Active
Tucked behind mature canopy on a rare, private one acre double lot, this sun drenched Crooked Oaks home is a garden lover`s dream and a golfer`s de...
286 Brightside Trail
Summerville, SC 29486
Nexton
Residential
MLS# 26017424 / Active
Welcome home to this beautifully appointed single-story cottage, where timeless charm meets modern comfort. Thoughtfully designed with an airy open...
282 Brightside Trail
Summerville, SC 29486
Nexton
Residential
MLS# 26017421 / Active
Welcome home to this beautifully designed single-story cottage that perfectly blends style, comfort, and easy living. Thoughtfully appointed with n...
1154 Plantation Lane
Mount Pleasant, SC 29464
Snee Farm
Residential
MLS# 26017419 / Active
Welcome to timeless elegance in the heart of Snee Farm, one of Mount Pleasant`s most prestigious golf course communities. Perfectly positioned on a...
629 Bridlewood Lane
Mount Pleasant, SC 29464
Bridlewood
Residential
MLS# 26017418 / Active
Welcome to 629 Bridlewood! This home in the heart of Mount Pleasant w/ a large front porch creates inviting curb appeal. Inside, the foyer opens to...
Reduced -$26,000
810 Kings Oak Court UNIT Unit 4
Charleston, SC 29492
Governors Cay
Residential
MLS# 26017417 / Active
Welcome to The Pointe at Governors Cay! This is an exceptional opportunity to live alongside the marshes of Charleston in a move-in ready townhome,...
1146 Bennett Circle
Holly Hill, SC 29059
Residential
MLS# 26017414 / Active
This is an adorable cottage. Redone in 2022 inside & out. The welcoming landscaping greets you as you walk up the stone walkway. New roof, new wind...
334 Clearpath Drive
Summerville, SC 29486
Nexton
Residential
Sunset lagoon views, exceptional natural light, and custom-level upgrades define this refined Nexton home in the upscale Midtown section. Set on a ...
6504 Rozier Road
Meggett, SC 29449
Meggett
Residential
MLS# 26017410 / Active
A Rare Meggett Find!! Welcome to your Private Marshfront Retreat with Endless Potential! Home features 1 Bed ,1 Bath, 864 Sq. Ft. that sits on 2.64...
33 Lockwood Drive UNIT Lu105
Charleston, SC 29401
The Harborage At Ashley Marina
Residential
MLS# 26017407 / Active
If you`ve been searching for the ideal boat slip that makes getting out on the water fast and convenient, this 45x13.5 slip at Harborage at Ashley ...
690 Lannie Lane
Moncks Corner, SC 29461
Broughton Road
Residential
MLS# 26017406 / Active
Welcome to 690 Lannie Lane, where country living meets modern convenience! Situated on over 2 acres with no HOA, this custom-built home offers the ...
Reduced -$24,900
1929 Westminster Road
Charleston, SC 29407
Sandhurst
Residential
MLS# 26017405 / Active
BEST DEAL IN WEST ASHLEY! Opportunities like this don`t come along often: a fully renovated home in one of West Ashley`s most established and desir...
Reduced -$5,000
123 Crooked Creek Court
Summerville, SC 29486
Sangaree
Residential
MLS# 26017399 / Active
Driving up to this home you will notice it is tucked away off of a cul de sac with extra privacy as far as the lot goes. No HOA, so you can do what...
Reduced -$5,000
4984 Jenkins Avenue
North Charleston, SC 29405
Park Circle
Residential
MLS# 26017398 / Active
Tucked away on a private street in the heart of Park Circle, this modern home offers a perfect blend of location, comfort, and convenience. Just tw...
33 Lockwood Drive UNIT Unit Lu135
Charleston, SC 29401
The Harborage At Ashley Marina
Residential
MLS# 26017388 / Active
The Harborage marina is one of the better ran marinas in Charleston, and if you have a larger sized vessel boat slip G-12 is for you. This is one o...
1217 Birch Drive
Summerton, SC 29148
Moss Pointe
Residential
MLS# 26017385 / Active
Move-in ready and beautifully updated, this like-new home sits on a spacious 1+ acre lot in the desirable lakeside community of Princess Pond. Offe...
33 Elliott Court
Walterboro, SC 29488
Colleton Acres
Residential
MLS# 26017383 / Active
Welcome to this brick ranch style home nestled on .46 acres in the Colleton Acres subdivision. This 3 bed one bath one story home with some modern ...
142 Wappoo Creek Drive UNIT #9
Charleston, SC 29412
Wappoo Landing
Residential
MLS# 26017382 / Active
Private community deep-water dock on the Intracoastal Waterway -- minutes from Downtown Charleston and Folly Beach. This beautifully maintained 1,8...
3560 Seaview Drive
Seabrook Island, SC 29455
Seabrook Island
Residential
MLS# 26017380 / Active
This home is perfection! It is located in the most ideal location on a quiet cul de sac, just a short walk to the beach, and with a stunning view o...
2703 Spruill Avenue
North Charleston, SC 29405
Residential
MLS# 26017379 / Active
Versatile property on the growing Spruill Avenue corridor with B-2 zoning that allows for a variety of commercial and residential uses. Whether you...
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