What Is Form 1099-A ?

If your home or other property was foreclosed on, repossessed, or abandoned, you may receive Form 1099-A, Acquisition or Abandonment of Secured Property, from your lender. This form reports important details about the event, including:
  • The date the property was acquired by the lender or abandoned (Box 1)
  • The outstanding principal loan balance (Box 2)
  • The property's fair market value (FMV) (Box 4)
  • Whether you were personally responsible for repaying the debt (Box 5) 
Even though Form 1099-A doesn't usually create taxable income by itself, you'll generally need the information on the form to report the disposition of the property on your tax return.

What Do I Do With a 1099-A?

How you report Form 1099-A depends on whether the property was personal-use property or business property.

If the Property Was Personal-Use Property

For a foreclosed primary home or other property that wasn't used for business, enter the transaction as the sale of the property.

In our software, go to:

  1. Federal
  2. Income (Select My Forms)
  3. Investments
  4. Stocks, Mutual Funds, Cryptocurrency, Collectibles, etc.
Enter the following information:
  • Date Acquired: The original purchase date of the property
  • Date Sold: The date shown in Box 1 of Form 1099-A
  • Sales Price: Generally based on either Box 2 (loan balance) or Box 4 (fair market value), depending on whether the debt was recourse or nonrecourse
  • Cost Basis: Your original purchase price and certain acquisition costs, often found on your closing documents

If the Property Was Business or Rental Property

If the foreclosed property was used in a business or as a rental, report the disposition on Form 4797.

In our software, go to:

  1. Federal
  2. Income (Select My Forms)
  3. Less Common Income
  4. Sale of Business Property (Form 4797)
Business-property foreclosures can be more complex because depreciation, adjusted basis, and gain or loss calculations may apply.

Understanding Recourse vs. Nonrecourse Debt

The type of loan affects how the transaction is reported.

Recourse Debt

If Box 5 is checked, you were generally personally liable for repayment of the debt. In many cases, the fair market value of the property is used when calculating the amount realized from the foreclosure. 

Nonrecourse Debt

If you weren't personally liable for the debt, the amount realized is generally the full outstanding debt balance rather than the property's fair market value. 

Because state laws and loan agreements can vary, it's a good idea to review your loan documents if you're unsure whether the debt was recourse or nonrecourse.

What If I Received Form 1099-C Instead?

Sometimes a lender forgives or cancels debt after a foreclosure. When that happens, you may receive Form 1099-C, Cancellation of Debt, instead of or in addition to Form 1099-A.

Here's why it matters: when you borrow money, the loan isn't taxed because you're expected to repay it. If all or part of that debt is later forgiven, the canceled amount may be taxable income unless an exclusion applies. 

To report canceled debt income in our software, go to:

  1. Federal
  2. Income (Select My Forms)
  3. Less Common Income
  4. Cancellation of Debt (Form 1099-C, Form 982)
Keep in mind that some taxpayers may qualify for exclusions that reduce or eliminate tax on canceled debt. Review Form 982 instructions or consult a tax professional if you think an exclusion may apply.

Helpful Tip

If you receive a Form 1099-A, don't ignore it. Even if no cash changed hands, the IRS generally treats a foreclosure or abandonment as a reportable property disposition. Entering the information correctly helps ensure any gain, loss, or canceled debt is reported accurately on your tax return.

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