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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725 Maynard Lane
Summerville, SC 29486
Cane Bay Plantation
Residential
MLS# 25017619 / Active
READY IN NOV/DEC! Price reflects a discount of $15,000! Seller will also pay $10,000 towards closing costs PLUS REDUCED RATE FINANCING with the use...
764 Maynard Lane
Summerville, SC 29486
Cane Bay Plantation
Residential
MLS# 25017618 / Active
READY IN NOV/DEC! Price reflects a discount of $15,000! Seller will also pay $10,000 towards closing costs PLUS REDUCED RATE FINANCING with the use...
786 Maynard Lane
Summerville, SC 29486
Cane Bay Plantation
Residential
MLS# 25017617 / Active
READY IN NOV/DEC! Price reflects a discount of $15,000! Seller will also pay $10,000 towards closing costs PLUS REDUCED RATE FINANCING with the use...
736 Maynard Lane
Summerville, SC 29486
Cane Bay Plantation
Residential
MLS# 25017616 / Active
READY DEC! 3-CAR GARAGE! Price reflects a discount of $15,000! Seller will also pay $10,000 towards closing costs PLUS REDUCED RATE FINANCING with ...
Reduced -$573
729 Maynard Lane
Summerville, SC 29486
Cane Bay Plantation
Residential
MLS# 25017615 / Active
READY IN NOV/DEC! Price reflects a discount of $15,000! Seller will also pay $10,000 towards closing costs PLUS REDUCED RATE FINANCING with the use...
762 Maynard Lane
Summerville, SC 29486
Cane Bay Plantation
Residential
MLS# 25017614 / Active
READY NOV/DEC! Price reflects a discount of $15,000! Seller will also pay $10,000 towards closing costs PLUS REDUCED RATE FINANCING with the use of...
353 Wappoo Trace Lane
Summerville, SC 29486
Cane Bay Plantation
Residential
MLS# 25017612 / Active
READY NOV! Price reflects a discount over $19,000! Seller will also pay $10,000 towards closing costs PLUS REDUCED RATE FINANCING with the use of S...
Reduced -$4,738
773 Maynard Lane
Summerville, SC 29486
Cane Bay Plantation
Residential
MLS# 25017610 / Active
READY DEC/JAN! 3-CAR GARAGE! Price reflects a discount of $15,000! Ask about REDUCED RATE FINANCING with the use of Sellers Preferred Lender and Cl...
731 Maynard Lane
Summerville, SC 29486
Cane Bay Plantation
Residential
MLS# 25017607 / Active
READY IN NOV/DEC! Price reflects a discount of $18,000! Seller will also pay $10,000 towards closing costs PLUS REDUCED RATE FINANCING with the use...
Reduced -$3,000
705 Maynard Lane
Summerville, SC 29486
Cane Bay Plantation
Residential
MLS# 25017604 / Active
READY IN NOVEMBER! Price reflects a discount of $19,000! Seller will also pay $10,000 towards closing costs PLUS REDUCED RATE FINANCING with the us...
Reduced -$4,970
1027 Riverbed Retreat Lane
Summerville, SC 29483
Summers Corner
Residential
MLS# 25017603 / Active
One of our most popular floorplans, the Litchfield II w/ Bons Room. This home has three bedrooms, including the Primary, on the main level. In addi...
Reduced -$5,000
1900 Morgan Avenue
North Charleston, SC 29406
Aichele Terrace
Residential
Convenient one story brick home so close to so many things! Fantastic starter home, good condition but being sold ''as-is''3 bed 2 ba, nice fenced ...
Increase +$20,000
2961 Sweetleaf Lane
Johns Island, SC 29455
Whitney Lake
Residential
MLS# 25017597 / Active
Welcome to this meticulously maintained, newly painted one-story end-unit townhome in the sought-after Whitney Lake community! Single-level end-uni...
Reduced -$3,910
Peirce Road
Ridgeville, SC 29472
Residential
MLS# 25017593 / Active
Stop scrolling and day dreaming of moving out to your own homestead and start packing - this is the opportunity you've been waiting for! This 3 acr...
Reduced -$6,000
1031 Riverbed Retreat Lane
Summerville, SC 29485
Summers Corner
Residential
MLS# 25017591 / Active
The Kensington, a home with Southern style and a flexbile layout! This home features double-front porches, a formal Dining Room, First floor Primar...
Reduced -$5,000
493 Trotters Lane
Moncks Corner, SC 29461
Boykins Run
Residential
MLS# 25017588 / Active
What a find in Moncks Corner! This charming townhome offers great curb appeal and a layout designed for modern living. A spacious driveway leads to...
Reduced -$10,000
837 Club Cottage Road
Edisto Island, SC 29438
Club Cottages
Residential
MLS# 25017586 / Active
Experience the Timeless Charm of Edisto Beach Living!Edisto Beach is truly one of the last unspoiled, family-oriented beach communities on the Sout...
Reduced -$5,000
510 Traders Alley
Mount Pleasant, SC 29464
Olde Park
Residential
MLS# 25017583 / Active
Welcome to 510 Traders Alley, easily one of the largest and rarest deep water offerings ever presented in south Mt Pleasant. This magnificent water...
644 Red Monarch Way
Moncks Corner, SC 29461
Cypress Preserve
Residential
MLS# 25017582 / Active
**DECEMBER DELIVERY** Beautiful home with Lowcountry Charm with double porches. As you enter the home there is a great spot for an entrance table, ...
Increase +$500
1682 Camfield Lane
Mount Pleasant, SC 29466
Dunes West
Residential
MLS# 25017579 / Active
Located in the heart of Ellington Woods, this beautifully updated townhome offers low-maintenance living in one of Mount Pleasant's most desirable ...
Reduced -$10,000
553 Red Monarch Way
Moncks Corner, SC 29461
Cypress Preserve
Residential
MLS# 25017575 / Active
**DECEMBER DELIVERY** The Fanning of the Arbor Series...
Reduced -$10,000
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