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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6 Sayle Road
Charleston, SC 29407
The Crescent
Residential
MLS# 25017021 / Active
Tucked beneath a canopy of live oaks in The Crescent, 6 Sayle Road offers timeless charm, modern updates, and one of Charleston's most desirable ad...
Reduced -$325,000
513 Richfield Way
Summerville, SC 29486
Cane Bay Plantation
Residential
MLS# 25017019 / Active
513 Richfield Way is a beautifully designed 5-bedroom, 3.5-bath home in the highly sought-after Waterside at The Lakes of Cane Bay. With serene pon...
1226 Spotflower Street
Summerville, SC 29485
Summers Corner
Residential
MLS# 25017018 / Active
This stunning 2024 home faces tranquil woods. Military family's relocation provides your opportunity to snag a 1 year old 2024 home & avoid waiting...
Reduced -$4,000
2831 Chicopee Drive
North Charleston, SC 29420
Colony North
Residential
MLS# 25017012 / Active
No HOA- Brand new carpeting and kitchen flooring!Welcome to this lovingly maintained 3 bedroom 2 bathroom home nestled in a quiet cul-de-sac -perfe...
Reduced -$10,000
2889 Backman Street
Mount Pleasant, SC 29466
Moores Landing
Residential
MLS# 25017008 / Active
LOCATION, LOCATION, LOCATION!!! 2889 Backman Street is in the heart of all that vibrant Mount Pleasant has to offer! Discover the perfect blend of ...
Reduced -$11,000
602 Yellow Leaf Lane
Summerville, SC 29486
Cane Bay Plantation
Residential
MLS# 25017004 / Active
MOTIVATED SELLERS! Drive your golfcart to shopping and restaurants! This 5 bedroom/3 bath STUNNER will take your breath away! Extended driveway. Pe...
Reduced -$1
109 Cypress Plantation Road
Moncks Corner, SC 29461
Strawberry Station
Residential
MLS# 25017003 / Active
MOTIVATED SELLERS! This meticulously maintained 5 bedroom/2.5 bathroom, 3 car tandem garage, perfect for that golf cart! Freshly painted interior t...
Reduced -$1
1464 Stratton Place
Mount Pleasant, SC 29466
Stratton By The Sound
Residential
MLS# 25017002 / Active
Stunning Drive-Under Home in Charleston National Golf Course - The Best of Both Worlds!Welcome to your dream Lowcountry lifestyle -- where golf, be...
1963 Longhorn Lane
Summerville, SC 29485
Summers Corner
Residential
MLS# 25017001 / Active
Located in the highly desirable Sweetgrass neighborhood of Summers Corner, 1963 Longhorn Lane is a contemporary, 5-bedroom, 4.5-bathroom home with ...
Reduced -$1,000
4028 Babbitt Street
Charleston, SC 29414
Ashley Park
Residential
MLS# 25016983 / Active
MOTIVATED SELLER! Rare Opportunity - Beautifully Updated 4-Bedroom Condo with $30K in Upgrades!Welcome to this move-in ready townhome offering the ...
Reduced -$14,000
269 Firewheel Court
Summerville, SC 29486
Cane Bay Plantation
Residential
MLS# 25016976 / Active
Welcome to your dream home in the highly sought-after Lindera Preserve at Cane Bay in Summerville! This beautiful 4-bedroom, 2-bathroom ranch-style...
Reduced -$5,000
204 Lewis Street
Walterboro, SC 29488
Residential
MLS# 25016969 / Active
This 740 block house wll make a great investment property. This home has 2 Bedrooms, 1 Bath, and an Open Livingroom/Kitchen. This home needs alot o...
Reduced -$10,000
1046 Tea Time Drive
Summerville, SC 29485
Summers Corner
Residential
MLS# 25016966 / Active
The Sweetgrass floor plan is as lovely as it sounds, with open living spaces and lots of natural light that everyone will enjoy. This home features...
Reduced -$10,000
409 Azalea Drive
Walterboro, SC 29488
Hyde Park
Residential
MLS# 25016960 / Active
Charming brick ranch nestled in the heart of Walterboro! This beautifully maintained 3-bedroom, 2-bath home offers classic curb appeal and a spacio...
282 Swallowtail Lane
Goose Creek, SC 29445
Landings At Montague
Residential
MLS# 25016954 / Active
Welcome to this beautifully maintained townhome featuring two spacious primary bedrooms and a host of thoughtful upgrades throughout. A new HVAC sy...
Reduced -$4,500
171 Threaded Fern Street
Summerville, SC 29485
Summers Corner
Residential
MLS# 25016950 / Active
*Est. completion Nov. 2025* The Kensington plan- this 5 bedroom, 3.5 bath home features a formal dining area, gas fireplace in the great room, firs...
Reduced -$22,000
72 Crossandra Avenue
Summerville, SC 29483
White Gables
Residential
MLS# 25016946 / Active
*Seller is offering 10K towards Rate Buy Down! Welcome to this incredibly well-maintained home, featuring 4 bedrooms and 2.5 baths, offering a brig...
201 Maywood Drive
Moncks Corner, SC 29461
Spring Grove Plantation
Residential
MLS# 25016933 / Active
HUGE PRICE REDUCTION! This stunning ONE STORY plus a FROG, is just waiting to welcome you home! Situated on a corner lot in the desirable Spring Gr...
Reduced -$9,000
145 Haventree Court
Summerville, SC 29486
Cane Bay Plantation
Residential
MLS# 25016926 / Active
This two-story townhome with a single car garage and oversized driveway has a private pond view. Interior features include a large kitchen island i...
Increase +$840
113 Lefton Landing
Summerville, SC 29485
Summers Corner
Residential
MLS# 25016925 / Active
*Est. completion August 2025* The Sweetgrass plan- This 4 bed 2.5 bath home features LVP flooring throughout the first floor, open railing with whi...
4636 Ashley View Lane
North Charleston, SC 29405
Wando Woods
Residential
MLS# 25016922 / Active
One of the BEST VALUES on the marshfront in all of Charleston with stunning sunsets and energy efficient upgrades! This elevated 3-bedroom, 2-bathr...
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