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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205 Gumdrop
Summerville, SC 29485
Summers Corner
Residential
MLS# 26017211 / Active
Welcome to your dream home at 205 Gum Drop Trail in desirable Summers Corner! This move-in-ready gem features stunning upgrades: 24KW Generac, Cat ...
1001 Colonial Pines Drive
Ladson, SC 29456
Tall Pines
Residential
MLS# 26017210 / Active
Beautiful, well maintained 1 level ranch is awaiting you in Tall Pines! Open floor plan with a spacious family room and a wood burning fireplace. S...
5054 Blackberry Lane
Ravenel, SC 29470
Tea Farm
Residential
MLS# 26017204 / Active
The 2 story Palmetto Villa offers the perfect blend of low-maintenance living and thoughtful design, now enhanced with a spacious three-bedroom, th...
1307 Apex Lane
Charleston, SC 29412
Meridian Place
Residential
MLS# 26017203 / Active
Welcome to this gorgeous one story 2 bedroom 2 bathroom end unit townhome that is conveniently located on the desirable James Island, minutes away ...
Reduced -$4,000
538 River Road
Johns Island, SC 29455
Johns Island
Residential
MLS# 26017202 / Active
This lovely 3b/2b home was a former schoolhouse that was converted to a home in the 90`s. Not only does this home have some of the best sunsets on ...
9166 Jefferies Highway
Walterboro, SC 29488
Residential
MLS# 26017200 / Active
Beautifully maintained ranch home on 6.22 acres!!!Discover the perfect blend of privacy, acreage, and modern updates in this beautifully updated 3 ...
105 Pine Gate Drive
Summerville, SC 29483
Central Avenue Townhomes
Residential
MLS# 26017197 / Active
Here`s your chance to live in this stunning practically new construction two-story former model home. The first-level owner`s suite offers a privat...
660 Ayers Drive
Charleston, SC 29412
Clearview
Residential
MLS# 26017195 / Active
Welcome to 660 Ayers Drive - a spacious, custom-built family home on nearly half an acre on one of James Island`s most desirable pockets. Offered b...
2824 Middle Street
Sullivans Island, SC 29482
Sullivans Island
Residential
MLS# 26017194 / Active
Surrounded by mature live oaks and set on more than half an acre, this beautifully renovated Sullivan`s Island home offers a rare combination of pr...
116 N Winter Street
Moncks Corner, SC 29461
Residential
MLS# 26017193 / Active
Rarely does a home come along that offers this level of quality, character, and outdoor living all on a spacious half-acre lot with no HOA. From th...
Reduced -$14,000
364 Pine Crest View Drive
Summerville, SC 29486
Cane Bay Plantation
Residential
MLS# 26017182 / Active
Built in 2025, this move-in ready 3-bedroom, 2-bath home in Lindera Preserve at Cane Bay Plantation offers spacious open concept living. Features i...
2857 Brownell Avenue
Sullivans Island, SC 29482
Sullivans Island
Residential
MLS# 26017180 / Active
This superb design by Steve Herlong sits on one of the quietest streets on the island - 3rd row from the beach. It offers 5 bedrooms, with a flex s...
69 Morris Street UNIT #301
Charleston, SC 29403
Morris Square
Residential
MLS# 26017178 / Active
Welcome to 301 Morris a beautifully maintained condo offering the perfect blend of comfort and modern city living. Ideally located in the heart of ...
306 Parish Farms Drive
Summerville, SC 29483
Carnes Crossroads
Residential
MLS# 26017176 / Active
Beautifully maintained Rollingwood Paired Home offers the perfect blend of thoughtful design and modern upgrades. The open-concept main living area...
Reduced -$5,000
979 Warrick Oaks Lane
Mount Pleasant, SC 29464
Warrick Oaks
Residential
Positioned on a desirable corner lot in the heart of Old Mount Pleasant, this beautifully appointed luxury cottage offers an exceptional blend of s...
Reduced -$25,000
418 Rowley Lane
Summerville, SC 29486
Cane Bay Plantation
Residential
MLS# 26017173 / Active
``Welcome to 418 Rowley Lane, a beautifully upgraded Yates model offering over-the-top space, functionality, and comfort. This impressive 5-bedroom...
Reduced -$5,000
176 The Oaks Avenue
Goose Creek, SC 29445
The Oaks
Residential
MLS# 26017169 / Active
Discover our award-winning Sago floorplan in the heart of Goose Creek. This stunning new construction home features 4 beds and 3.5 baths, offering ...
Reduced -$20,007
265 Clarabelle Lane
Summerville, SC 29483
Six Oaks
Residential
MLS# 26017162 / Active
Meet the Lancaster plan - This spacious layout features 4 bedrooms, 2.5 bathrooms, a dedicated home office, and an open-concept living area perfect...
1203 Sea Aire Drive
Charleston, SC 29412
Teal Acres
Residential
MLS# 26017157 / Active
Coastal living awaits in this beautifully renovated brick ranch just minutes from The Edge of America - Folly Beach. You will enjoy close proximity...
Reduced -$10,000
355 Calm Water Way
Summerville, SC 29486
Cane Bay Plantation
Residential
MLS# 26017156 / Active
Brand-New Home and Ready for Move-In!! Perfectly situated in a spacious cul-de-sac portion of Calm Water Way this is a quiet section of the Coves! ...
55 Ocean Point Drive
Isle of Palms, SC 29451
Wild Dunes
Residential
MLS# 26017155 / Active
Perfectly positioned within the prestigious gated enclave of Ocean Point, 55 Ocean Point offers a rare opportunity to experience some of the finest...
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