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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110 Creek Bend Drive
Summerville, SC 29485
Bridges Of Summerville
Residential
MLS# 26017363 / Active
Looking for a single story home in Summerville with energy-saving upgrades and outdoor living space? This ranch offers comfortable living in a cent...
1036 Old Cypress Run
Hanahan, SC 29410
Oak Pointe
Residential
MLS# 26017360 / Active
This stunning 4-bedroom, 3.5-bath, ~2,300 sq ft end-unit townhome offers the space and amenities of a single-family home with unbeatable value. On ...
25 Ocean Green Drive
Kiawah Island, SC 29455
Residential
MLS# 26017355 / Active
Welcome home to 25 Ocean Green Drive in the heart of Vanderhorst Plantation, just past the second gate. Situated across from the community pool and...
114 Ashley Hill Drive
Goose Creek, SC 29445
Crowfield Plantation
Residential
MLS# 26017349 / Active
Golf-Community Living, Generous Space, and Great Potential come together at 114 Ashley Hill Drive in The Hamlets in the coveted Crowfield community...
216 Hungerford Drive
Summerville, SC 29486
Cane Bay Plantation
Residential
MLS# 26017348 / Active
BELTON A FLOORPLAN! Kitchen opens to casual dining area. Granite countertops, tiled backsplash, walk-in pantry & gas range. Luxury Vinyl Plank on m...
5762 Hwy165
Ravenel, SC 29470
Ravenel
Residential
MLS# 26017343 / Active
Originally built in 1901, this renovated 3-bed, 2-bath cottage blends charm and character with modern updates. The half acre lot situated under gra...
218 Hungerford Drive
Summerville, SC 29486
Cane Bay Plantation
Residential
MLS# 26017342 / Active
READY EARLY FALL ! FINWOOD A FLOORPLAN! Open kitchen with granite countertops, tiled backsplash, walk-in pantry, microwave & gas range. Luxury Viny...
8011 Caswell Court
Ladson, SC 29456
Elms Glen
Residential
MLS# 26017339 / Active
SEPT. Delivery! *4.99% (FHA/VA) FIXED RATE PLUS PLUS $3,500 CC w/ use of pref. Lender and Attorney!* Welcome to Elms Glen...the latest new communit...
Reduced -$5,000
145 Brightwood Drive
Huger, SC 29450
Brightwood
Residential
MLS# 26017337 / Active
This beautifully upgraded home features a highly desirable main-level primary suite and is packed with premium features throughout its spacious, op...
Reduced -$10,000
8015 Ardbeg Cove
Ravenel, SC 29470
Hillcrest
Residential
MLS# 26017335 / Active
Ravenel, SC Homes at Hillcrest | Open Floor Plans Near West Ashley & CharlestonWelcome to 8015 Ardbeg Cove in the Hillcrest community of Ravenel, S...
Increase +$1,000
305 Magnolia Road
Charleston, SC 29407
Ashley Forest
Residential
MLS# 26017334 / Active
Don`t miss this RARE opportunity to build in one of West Ashley`s most sought-after neighborhoods, just a short walk to Avondale shops and dining. ...
1212 Jeanna Street
Summerville, SC 29486
Ashley Plantation
Residential
MLS# 26017333 / Active
Welcome home to this beautifully maintained 3-bedroom, 2.5-bath residence offering approximately 1,344 square feet of comfortable living space. Fea...
410 Colfax Lane
Summerville, SC 29486
Cane Bay Plantation
Residential
MLS# 26017328 / Active
KINGSFORD C 3 BEDROOM WITH LOFT! WALK into the foyer that extends to the great room and kitchen w/casual dining. Gas range, white cabinets, granite...
208 Oakbend Street
Summerville, SC 29483
Nexton
Residential
MLS# 26017324 / Active
Welcome to 208 Oakbend Street in Nexton`s sought-after Brighton Park Village! Backing to a tranquil pond with picturesque views of South Carolina p...
8019 Ardbeg Cove
Ravenel, SC 29470
Hillcrest
Residential
MLS# 26017321 / Active
Hillcrest Ravenel SC Homes for Sale | New Construction Near Edisto Beach & Hwy 17Welcome to 8019 Ardbeg Cove in the Hillcrest community of Ravenel,...
Increase +$1,000
243 Grouper Lane
Summerville, SC 29483
The Cove at Mallard Crossing
Residential
MLS# 26017320 / Active
New Construction Home in Summerville, SCYour new chapter begins at 243 Grouper Lane, located in The Cove at Mallard Crossing. This alley-fed home i...
Reduced -$150
112 Pine Valley Drive
Summerville, SC 29483
Pine Forest Country Club
Residential
MLS# 26017319 / Active
Welcome to this exceptional home in the Pine Forest Country Club community of Summerville. With its attractive brick exterior, three-car garage fea...
2081 Utsey Street
Johns Island, SC 29455
Oakfield
Residential
MLS# 26017315 / Active
Welcome to 2081 Utsey Street, a thoughtfully designed home that offers a rare combination of privacy, flexibility, and convenience in the highly de...
6078 Grangestone Lane
Ravenel, SC 29470
Hillcrest
Residential
MLS# 26017311 / Active
Homes in Ravenel, SC | Hillcrest Community Near Charleston & John`s IslandWelcome to 6078 Grangestone Lane in the Hillcrest community of Ravenel, S...
Increase +$1,000
411 Aberdeen Circle
Summerville, SC 29483
Scotts Mill
Residential
MLS# 26017310 / Active
Welcome home to this spacious 4-bedroom,2.5-bath residence offering comfort, style ,and plenty of room to entertain. The inviting family room featu...
Reduced -$14,100
8340 Crooked Creek Lane
Edisto Island, SC 29438
Residential
MLS# 26017309 / Active
Set on nearly nine beautifully maintained acres along the tranquil waters of Shingle Creek, this extraordinary deepwater estate on Edisto Island, f...
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