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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516 Misty Bluff Circle
Huger, SC 29450
French Quarter Creek
Residential
MLS# 26017120 / Active
Welcome home to 516 Misty Bluff Circle! This beautifully maintained single-story home offers 3 bedrooms, 2 bathrooms, and an open split-bedroom flo...
Reduced -$5,000
2201 Pinehurst Avenue
Charleston, SC 29414
Springfield
Residential
MLS# 26017118 / Active
Welcome to this move-in ready brick ranch in the established Springfield neighborhood of West Ashley. Offering 3 bedrooms and 2 bathrooms, this cha...
3011 Scuba Drive
Charleston, SC 29414
Boltons Landing
Residential
MLS# 26017117 / Active
Welcome to 3011 Scuba Drive, a beautifully refreshed home situated on a desirable pond-front homesite in one of Charleston`s most convenient locati...
4904 W Liberty Park Circle
North Charleston, SC 29405
Oak Terrace Preserve
Residential
MLS# 26017116 / Active
Welcome to your next chapter at this charming home, nestled in a serene corner of Oak Terrace Preserve. This 3-bedroom, 2.5-bathroom home offers a ...
127 Hawthorne Landing Drive
Goose Creek, SC 29445
Hawthorne Landing
Residential
MLS# 26017114 / Active
Welcome to 127 Hawthorne Landing Drive, a beautifully maintained single-family detached home offering the perfect blend of modern design, comfort, ...
105 Bridgecreek Drive
Goose Creek, SC 29445
Crowfield Plantation
Residential
MLS# 26017112 / Active
Welcome to your serene sanctuary at 105 Bridgecreek Dr. Home has a spacious living room that is a delight, featuring a warm stone fireplace with a ...
224 Oak Park Street
Summerville, SC 29486
Nexton
Residential
MLS# 26017111 / Active
. Dual Masters! Enjoy this charming and beautifully maintained town home in the highly sought Brighton Park Village in Nexton. Open floor plan with...
207 Little Oak Island Drive
Folly Beach, SC 29439
Little Oak
Residential
MLS# 26017108 / Active
FULLY RENOVATED & OFFERED FULLY FURNISHED -- THE ULTIMATE TURNKEY FOLLY BEACH RETREAT!Don`t miss this rare opportunity to own a beautifully updated...
112 Bristow Drive
Summerville, SC 29483
Flowertown
Residential
MLS# 26017107 / Active
$6,000 in Seller Concessions!! MOVE IN READY! NO DOWN PAYMENT? NO PROBLEM! NO HOA!! This home qualifies for 100% financing with NO PMI! Featuring 3...
3965 Bryson Lane
Mount Pleasant, SC 29466
Carolina Park
Residential
MLS# 26017103 / Active
Step into serenity at this stunning 4-bedroom, 3.5-bathroom three-story home nestled within the esteemed Carolina Park Neighborhood. This cul-de-sa...
549 Cooper Village Lane
Mount Pleasant, SC 29464
Bridgeview
Residential
MLS# 26017102 / Active
Welcome to Bridgeview - the quiet and exclusive Mount Pleasant development near everything where you get to use Charleston as your backyard! Featur...
Reduced -$100,000
208 Darcy Avenue
Goose Creek, SC 29445
Persimmon Hill
Residential
MLS# 26017098 / Active
Three bedrooms. Three and a half baths. Multiple living spaces. Pond views. Two decks. A massive bonus room. And wait until you see the closets! Th...
9492 Markley Boulevard
Summerville, SC 29485
Wescott Plantation
Residential
MLS# 26017095 / Active
Welcome to 9492 Markley Boulevard, a beautifully maintained home nestled along the third fairway of the Wescott Plantation Golf Course, where Lowco...
111 High Hammock Villas
Seabrook Island, SC 29455
Residential
MLS# 26017091 / Active
Experience the ultimate Seabrook Island lifestyle in this beautifully updated, second-floor High Hammock Villa. Brimming with personality and bathe...
6037 Chisolm Road
Johns Island, SC 29455
Residential
MLS# 26017087 / Active
Bring your BOAT and RV. COUNTRY LIVING AT ITS FINEST WITH A BEAUTIFUL Private wooded lot JUST UNDER AN ACRE!! Welcome to this beautifully crafted o...
4416 Wild Thicket Lane
North Charleston, SC 29420
Coosaw Creek Country Club
Residential
MLS# 26017086 / Active
Stunning Golf Course Home in Gated Community! Welcome to this exceptional, MOVE-IN ready, four-bedroom, three-bath home perfectly situated on the g...
2858 Woodland Park Drive
Mount Pleasant, SC 29466
Hamlin Park
Residential
MLS# 26017085 / Active
A great opportunity in Hamlin Park! This end-unit townhome needs some minor repairs and painting. Located in the north end of Rifle Range Road, thi...
102 Spanish Oaks Lane
Ladson, SC 29456
Grand Oaks Preserve
Residential
MLS# 26017084 / Active
Welcome to 102 Spanish Oaks Lane, a move-in ready home located in the highly desirable Dorchester District Two school district that combines comfor...
Reduced -$4,000
1182 Russell Drive
Mount Pleasant, SC 29464
Residential
MLS# 26017083 / Active
great investment opportunity with many options
1006 Fiall Street
Charleston, SC 29407
Maryville
Residential
MLS# 26017080 / Active
Welcome to this beautiful home in the heart of West Ashley, offering the perfect blend of modern updates, convenience, and value. Ideally located j...
Reduced -$25,000
1035 Dominion Drive
Hanahan, SC 29410
Dominion Hills
Residential
MLS# 26017078 / Active
Welcome to Dominion Hills, one of Charleston`s most established waterfront communities, where timeless charm meets Lowcountry living. Perfectly pos...
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