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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6220 N Highway 17
Awendaw, SC 29429
Residential
MLS# 26017264 / Active
NEW CONSTRUCTION IN AWENDAW ~ 2,622 SF~ NO HOA ~ Large lot (0.75 AC) ~ 4 bedrooms, 3 full bathrooms ~ separate dining room ~ huge master suite with...
2244 Ashley Crossing Drive UNIT #324
Charleston, SC 29414
Arboretum
Residential
MLS# 26017262 / Active
Welcome to the Arboretum. Your hassle-free living experience awaits. Your new home is features an open floor plan with hardwood floors in the main ...
191 Avonshire Drive
Summerville, SC 29483
Weatherstone
Residential
MLS# 26017261 / Active
Welcome home! Check out this 4-bedroom, 3-bath residence in Summerville! Offering approximately 2,100 square feet of thoughtfully designed living s...
9484 Falling Embers Lane
Ladson, SC 29456
Paddock Pointe
Residential
MLS# 26017257 / Active
Welcome home to 9484 Falling Embers Lane! Tucked away on a quiet, low-traffic cul-de-sac in the highly desirable Paddock Point neighborhood, this 4...
2354 Brinkley Road
Johns Island, SC 29455
Oakfield
Residential
MLS# 26017256 / Active
Enjoy stunning pond views and exceptional indoor-outdoor living in this beautifully maintained 5-bedroom, 4.5-bath Woodward floor plan located in t...
207 Nelliefield Creek Drive
Charleston, SC 29492
Nelliefield Plantation
Residential
MLS# 26017252 / Active
207 Nelliefield Creek Drive is a move-in ready pond-view home in Nelliefield Plantation, an established Charleston-area community near Point Hope a...
3732 Abercrombie Court
Mount Pleasant, SC 29466
Carolina Park
Residential
MLS# 26017251 / Active
Tucked away on a quiet cul-de-sac in the prestigious Carolina Park community, this beautifully appointed 3-bedroom, 2.5-bath residence delivers an ...
Reduced -$25,000
1134 Kane Blue Run
Summerville, SC 29485
Summers Corner
Residential
Welcome to 1134 Kane Blue Run, located in the highly sought-after Horizons active adult community. This beautifully designed single-story home offe...
Increase +$10,000
9831 Black Tupelo Lane
Ladson, SC 29456
Coosaw Preserve
Residential
Your dream kitchen! 5 Bedrooms, 3.5 Bathrooms, plus an Office. Award winning Dorchester District 2 Schools. Beautiful neighborhood pool and playpar...
134 Archers Bay Street
Summerville, SC 29486
Carnes Crossroads
Residential
MLS# 26017239 / Active
Welcome to Horizons, an exclusive 55+ gated active adult community situated in the highly desirable Carnes Crossroads masterplan. Residents enjoy l...
97 Mariners Cay Drive
Folly Beach, SC 29439
Mariners Cay
Residential
MLS# 26017234 / Active
Mariners Cay, a Folly Beach gated waterfront communities. 3-bedroom, 2 bath condo, a short walk to the ocean and only minutes from 15 from downtown...
3202 Wood Duck Place
Seabrook Island, SC 29455
Seabrook Island
Residential
MLS# 26017232 / Active
Updated lagoon-front home on one and a half lots in a quiet residential setting on Seabrook Island. This well-maintained, single-level residence of...
1032 Rosewood Lane
Mount Pleasant, SC 29464
Southampton Pointe
Residential
MLS# 26017229 / Active
PRIVATE GARAGE conveys!! Sleek, renovated condominium that overlooks the resort-like pool in the gated community of Southampton Pointe. New kitchen...
1705 Redwood
Moncks Corner, SC 29461
Pimlico
Residential
MLS# 26017228 / Active
Rare opportunity in desirable Pimlico Plantation! This spacious 5-bedroom, 2-bath home has the perfect blend of comfort, flexibility, and outdoor l...
2100 Utsey Street
Johns Island, SC 29455
Oakfield
Residential
MLS# 26017225 / Active
2100 Utsey is move-in ready and full of thoughtful touches throughout. The options are really endless with this incredible floorplan. The main leve...
9 Colonial Street
Charleston, SC 29401
South Of Broad
Residential
MLS# 26017224 / Active
Nestled on picturesque Colonial Street in Charleston`s coveted South of Broad neighborhood, 9 Colonial Street is a beautifully preserved century-ol...
1530 Fort Johnson Road UNIT Apt 1e
Charleston, SC 29412
Brigadier Condominium
Residential
MLS# 26017223 / Active
Welcome to Brigadier Condominium, where comfort, convenience, and a fantastic location come together in this spacious 3-bedroom, 2.5-bath condo. Of...
3616 Marshfield Road
Johns Island, SC 29455
Beech Grove
Residential
MLS# 26017222 / Active
Looking for the perfect place to call your first home? This charming 3-bedroom, 1-bath brick ranch offers a great opportunity to step into homeowne...
200 Watersglen Drive
Summerville, SC 29486
Cane Bay Plantation
Residential
MLS# 26017220 / Active
Here it is, spacious home, fenced back yard, on a corner lot. DR Horton`s Robie floorplan, 5 bedrooms, 3 bathrooms, with over 2,350 sqft, including...
7071 Windham Way
Ladson, SC 29456
Elms Glen
Residential
MLS# 26017218 / Active
Sept Delivery! *$10,000 TOWARDS CLOSING COST and or RATE BUY DOWN WITH USE OF PREFERRED LENDER & CLOSING ATTORNEY*Welcome to Elms Glen...the latest...
Reduced -$10,000
691 Redbud Lane
Summerville, SC 29483
Cane Bay Plantation
Residential
MLS# 26017217 / Active
Why wait months for new construction when you can move right into this beautifully maintained, better-than-new home in Lindera Preserve? Situated o...
Reduced -$5,000
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