Stage 4 of 4 · The Sale and What Follows

1099-C

The tax form a lender files when it cancels debt, reporting the forgiven amount to the borrower and the IRS.

In plain English
Forgiven debt can be taxable income. When a lender writes off a shortfall after a short sale, a deed in lieu or a foreclosure, it may issue this form for the cancelled amount.
Example
A lender forgives fifty thousand dollars on a short sale and reports it, so the seller sees it on next year's return.
Why it matters
Exclusions exist for a primary residence and for insolvency, but they must be claimed, so a surprise here is a surprise with a deadline.
Remember it as
Forgiven is not always free.

Where it lands in the timeline

An emptied living room at dusk, pale rectangles on the wall where frames once hung, one lamp glowing on a small side table and a few taped boxes by the door, Temecula CA.

Stage 4: The Sale and What Follows

The gavel falls in minutes, but the money, the move and even the tax bill keep arriving long after, so this phase covers what the sale leaves behind.

Every term in the Foreclosure Glossary →

Learning the words is step one. Beating the date is step two.

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