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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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...
1851 Montclair Drive UNIT 1851-B
Mount Pleasant, SC 29464
Montclair
Residential
MLS# 26017153 / Active
Welcome home to a completely renovated and meticulously cared for townhome, conveniently located across from Town Center and less than 5 miles from...
Reduced -$4,500
7312 Suncatcher Drive
Hanahan, SC 29410
Tanner Plantation
Residential
MLS# 26017152 / Active
UPDATED PHOTOS! This adorable garden home has been completely renovated! It is in the highly sought after neighborhood of Tanner Plantation, in Han...
1404 Leisure Drive
Summerville, SC 29486
Sheep Island
Residential
MLS# 26017149 / Active
Private oasis tucked away on 5 acres but only 15min away from all the dining and shopping opportunities that the Nexton area has to offer. This hom...
941 Dusk Drive
Summerville, SC 29486
Nexton
Residential
MLS# 26017146 / Active
Welcome to Hammock Walk at Nexton, a premier 55+ community designed for low-maintenance, lock-and-leave living. This beautiful turnkey 3-bedroom, 3...
Reduced -$10,100
147 Morning View Way
Moncks Corner, SC 29461
Lakeview at Kitfield
Residential
MLS# 26017145 / Active
Welcome to your dream home at Lakeview at Kitfield! This stunning two-story home offers 2,632 sq. ft. of beautifully designed living space featurin...
438 Radiant Blue Way
Summerville, SC 29486
Cane Bay Plantation
Residential
MLS# 26017144 / Active
Brand NEW energy-efficient home! Designer Package Bold Sophistication. The Hurley`s welcoming foyer gives way to the spacious kitchen and open-conc...
Reduced -$5,000
371 Calm Water Way
Summerville, SC 29486
Cane Bay Plantation
Residential
MLS# 26017142 / Active
Brand NEW energy-efficient home! Outfit the Marley`s main-level flex space as a home office and skip your commute. In the kitchen, the island overl...
Reduced -$10,000
116 Chownings Lane
Goose Creek, SC 29445
Crowfield Plantation
Residential
MLS# 26017141 / Active
Charming 3BR/2BA ranch in desirable Crowfield Plantation featuring 1,450 sq ft of inviting living space. Enjoy vaulted ceilings in the living room ...
2050 Utsey Street
Johns Island, SC 29455
Oakfield
Residential
MLS# 26017139 / Active
LOWEST PRICED PULTE BUILD IN OAKFIELD! Welcome to this beautiful home ideally situated in a sought-after neighborhood filled with green space and w...
200 Bucksley Lane UNIT #303
Charleston, SC 29492
254 Seven Farms Drive
Residential
MLS# 26017138 / Active
Welcome to 200 Bucksley Lane #303, where thoughtful design, quality craftsmanship, and attention to detail come together to create a truly turnkey ...
118 Rusting Link Road
Summerville, SC 29483
Mallard Crossing
Residential
MLS# 26017135 / Active
Welcome home to this spacious 2-story residence located in the desirable Mallard Crossing subdivision of Summerville, SC! Featuring 5 bedrooms and ...
Reduced -$5,000
437 Radiant Blue Way
Summerville, SC 29486
Cane Bay Plantation
Residential
MLS# 26017133 / Active
Brand NEW energy-efficient home! Entertain with ease in the Gibson`s bright, open-concept living space. A secondary bath with dual sinks serves bot...
Reduced -$15,000
106 Calm Water Way
Summerville, SC 29486
Cane Bay Plantation
Residential
MLS# 26017132 / Active
Sun, palms, and Summerville living at its finest.This is the one you have been waiting for. Nestled in one of the Lowcountry`s most sought after ma...
367 Calm Water Way
Summerville, SC 29486
Cane Bay Plantation
Residential
MLS# 26017131 / Active
Brand NEW energy-efficient home! Purpose the Newport`s sizeable flex space into the media room you`ve always wanted. A walk-in pantry and large kit...
Increase +$8,000
44 State Street UNIT A
Charleston, SC 29401
French Quarter
Residential
MLS# 26017130 / Active
Located in the heart of Charleston`s historic French Quarter, this meticulously restored residence at 44 State Street offers a rare opportunity to ...
Reduced -$100,000
920 Ravenswood Drive
Charleston, SC 29412
Ashcroft Hall
Residential
MLS# 26017129 / Active
Welcome home to this charming James Island retreat, where comfort, character and functionality come together beautifully. This inviting 3-BR, 2-BA ...
Reduced -$10,000
3044 Emma Lane
Mount Pleasant, SC 29466
Emma Lane Townes
Residential
MLS# 26017128 / Active
Welcome to Emma Lane Townes, a sought-after luxury townhome community in the heart of Mount Pleasant. Ideally located less than 10 minutes from the...
194 Lime Spring Road
Cross, SC 29436
Residential
MLS# 26017127 / Active
2BR 1BA ranch home with great room with kitchen, bar, living room, screened back porch in a cove on Lake Marion. Great water all seasons! New metal...
217 Equinox Circle
Ladson, SC 29456
Heatherwoods
Residential
MLS# 26017125 / Active
Well Maintained home located in Heatherwoods Subdivision! Home features 4 bedrooms, 2 full baths and has all NEW luxury Vinyl Flooring throughout t...
Reduced -$5,100
1836 Saint Julian Drive
Charleston, SC 29407
West Ashley Plantation
Residential
MLS# 26017123 / Active
Move in ready one story brick home in West Ashley Plantation! This 3 bedroom, 2 bath home is situated on a private, wooded lot with no HOA. The ope...
Reduced -$10,000
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