Do You Know: What Is Form 1099-A?

Jan 05, 2024 By Triston Martin


Form 1099-A, Acquisition or Abandonment of Secured Property, must be filled out to report the foreclosure process. This form may be issued to you if your mortgage lender has cancelled all or part of your mortgage due to foreclosure or a short sale. This paperwork could also be sent to you if your mortgage lender completed a short sale on your property. The mortgage companies who issued loans on the foreclosed property will send you a separate Form 1099-A. Debt cancellation is income and necessitates filing Form 1099-A with the Internal Revenue Service. The fact that you were able to get a mortgage loan in the first place and then stop making payments on it indicates that you have a regular source of income. Depending on the particulars of your position, this income might or might not be taxable.

Definition and Examples of Form 1099-A

Form 1099-A details the "Acquisition or Abandonment of Secured Property" during the tax year. If your house goes through foreclosure, your mortgage lender will likely hand it over to you so you can stay in it while you file your taxes. The IRS treats a foreclosure similarly to a sale of a property. In this scenario, there is no "selling price," at least not in the conventional sense where one might walk away from a typical sale with cold hard cash. It would help if you still determined whether or not you have a capital gain or loss.

Debt cancellations may be reported as income, but this is something to consider. For instance, if you borrowed $150,000 to put down on the house but then had some form of financial difficulty and could no longer afford the mortgage. Even if you are no longer obligated to make payments on a $125,000 loan that was outstanding when the lender foreclosed, the Internal Revenue Service considers this to be $125,000 in income for you. Form 1099- I will report this transaction to the IRS and send you a copy so you can include the relevant information in your tax return.

Who Uses Form 1099-A?

The lender must file IRS Form 1099-A and give the borrower a copy. Copies must be given to all borrowers if more than one person or entity is liable for repaying the loan. Each borrower must then take responsibility for recording this data and their share of the transaction on their tax returns.

What to Do if You Don't Receive Form 1099-A

If you have not received a Form 1099-A from your lender by January 31, following the year your house was repossessed, you should contact them immediately. The financial institution has until February 28 to provide you with a copy of the form, even though it must be submitted to the IRS considerably earlier. Alternatively, you can contact the lender directly to dispute the accuracy of the data they have on file for you. Any questions about the 1099-A should be directed to the designated contact at the institution listed on the form.

How to Read Form 1099-A

The date of sale and sales price of the repossessed property is included on the 1099-A and must be reported to the IRS as part of the foreclosure process. The foreclosure sale price can be set at either the outstanding loan debt or the home's fair market value as of the foreclosure sale date. Box 2 of the 1099-A details the remaining balance of the loan, while box 4 describes the property's fair market value. In Box 1, you'll see the foreclosure sale date, the date the property will be auctioned. Further, taxpayers need to know whether or not the loan in question was a recourse loan.

Box 5 of the 1099-A asks, "Check if the borrower was personally accountable for repayment of the debt." If the lender checked this box, then the loan was likely a recourse loan. On the reverse side of the form, you'll find this space. The selling price must be recorded on Schedule D of Form 1040, "Capital Gains and Losses," along with any relevant information. Depending on which is higher, this will be either box 2's amount or box 4's amount. If you need help deciding which box to check, it's best to go to a local tax professional. State financing regulations will dictate the correct box.


A copy of Form 1099-A would be mailed to you by your lender if you were required to surrender a home or other real estate property due to foreclosure. If more than one mortgage or loan is recorded against a piece of property, you may receive multiple 1099-A forms. Usually, you have until January 31 of each year to get them in the mail. As part of your tax filing, you'll need to include details about the foreclosure that were provided to you on Form 1099-A. Schedule D of Form 1040 is where you'll want to enter this data; it's where you'll report any capital gains or losses. Take the home's current fair market value and subtract the tax basis you have in the property, which is the purchase price minus any modifications. This will tell you whether or not you earned a profit.

Related articles

How to Buy a Home in Your 20s?

By Susan Kelly / Oct 05, 2023

Having our own home is something everybody wishes to have one day, especially in our 20s. Moreover, if we have the capability and means to invest when young, then it is ideal to buy our own home in our 20s.


6 Factors That Will Determine If CD Rates Go Up in 2022

By Triston Martin / Dec 30, 2023

CD rates are expected to increase in 2022, but not significantly. The reason? Yields on CDs aren’t likely going up and could even decrease slightly due a drop that was seen last year when many banks offered ultra-low 2% interest rate options just for keeping your money safe!


An Overview of Visa Infinite Perks

By Triston Martin / Feb 03, 2024

Visa offers three different types of credit cards to suit the needs of people with diverse incomes and spending habits. Visa Infinite is the highest tier in exclusivity and rewards, with a growing set of perks for cardholders as they progress. Remember that you'll need to invest some money to reap these rewards


Successfully Live Within Your Means

By Susan Kelly / Dec 05, 2023

That's good news since it implies you're able to put some cash away each month after paying all of your expenditures. Living below your means can help you save money and develop wealth more quickly.


A Beginner's Guide to Overriding a Power of Attorney

By Triston Martin / Jan 26, 2024

Are you looking for a guide to find out who can override the power of attorney? Well, if that’s so, then give this article a read to understand it better.


How Much Are Taxes for a Small Business?

By Susan Kelly / Nov 23, 2023

Don't let taxes become the bane of your small business. Get up to speed on taxes with this informative guide to help you navigate the complexities and determine how much money you owe.


Deciphering Credit Unions: Unveiling Their Distinctions from Traditional Banks

By Susan Kelly / Nov 25, 2023

Discover the unique world of credit unions and unravel the distinctions that set them apart from traditional banks. Explore the benefits and services they offer, and gain insights into choosing the right financial institution for your needs.


What are Collection Costs: Legality of Extra Fees by Debt Collectors Unveiled

By Triston Martin / Jan 14, 2024

Do you want to know the truth about collection costs? Let’s learn whether debt collectors can legally add extra fees to your outstanding balances.


Can You Get a Mortgage in Retirement?

By Susan Kelly / Dec 29, 2023

Most individuals get a mortgage while they are still in their working years since this is the time in their lives when their income is at its peak, and it is the simplest time to make payments. It is not the situation for everyone. You may be moving to be closer to family and need a mortgage to make a move possible. Alternatively, you could be downsizing to a new property.


RBC Wealth Management Investment Company Review

By Susan Kelly / Oct 15, 2023

RBC Wealth Management Investment Company, a Canadian-based investment firm that offers personalized advice and services to help investors reach their financial goals. Discuss the advantages of using RBC Wealth Management, such as access to experienced advisors, personalized investment advice, competitive pricing on trades, and the ability to create tax-advantaged accounts for long-term growth.


Everything You Need To Know About Capital One Walmart Rewards Mastercard

By Triston Martin / Feb 21, 2024

If you shop at Walmart regularly, the Capital One Walmart Rewards Mastercard, which does not charge an annual fee, is designed with you in mind.


Comparing the cost of short sales and foreclosures

By Susan Kelly / Jan 15, 2024

Short sales are voluntary decisions made by the homeowner; the lender must approve them. Foreclosures are unavoidable for the homeowner since the lender files a lawsuit to seize and sell the property. Any flaws due to the lender are the responsibility of the homeowners who use short sales.