Taxes Tax Planning What Is Form 1099-A? IRS Form 1099-A Explained By William Perez William Perez Twitter William Perez is a tax expert with 20+ years of experience advising on individual and small business tax. He has written hundreds of articles covering topics including filing taxes, solving tax issues, tax credits and deductions, tax planning, and taxable income. He previously worked for the IRS and holds an enrolled agent certification. learn about our editorial policies Updated on May 25, 2022 Reviewed by Michelle P Scott Reviewed by Michelle P Scott Michelle P. Scott is a New York attorney with extensive experience in tax, corporate, financial, and nonprofit law, and public policy. As General Counsel, private practitioner, and Congressional counsel, she has advised financial institutions, businesses, charities, individuals, and public officials, and written and lectured extensively. learn about our financial review board Share Tweet Pin Email In This Article View All In This Article Definition and Examples of Form 1099-A Who Uses Form 1099-A? What to Do if You Don’t Receive Form 1099-A How to Read Form 1099-A Requirements for Reporting a Capital Gain or Loss Form 1099-A vs. Form 1099-C Definition IRS Form 1099-A is an informational statement that reports foreclosure on property. Homeowners will typically receive an IRS Form 1099-A from their lender after their home has been foreclosed upon, and the IRS receives a copy as well. The information on the form is necessary to report the transaction on your tax return. Photo: SeanShot / E+ / Getty Images Definition and Examples of Form 1099-A Form 1099-A reports the "Acquisition or Abandonment of Secured Property." It will be provided to you by your mortgage lender if your home is foreclosed upon, for use in preparing your tax return. The Internal Revenue Service treats a foreclosure just the same as if you had sold your property. You must calculate your capital gain or loss, but there's no "selling price" in this scenario, at least not in the same context as a normal sale when you might receive cash in hand after the transaction. You might also have to report any canceled debt as income. Note Capital gains tax might also come due because the IRS takes the position that you "sold" the property. For example, you might have borrowed $150,000 to purchase your home, then encountered some financial difficulty, so you were unable to make the mortgage payments. The IRS takes the position that if you still owed $125,000 at the time the lender foreclosed, and if you're no longer liable for repaying it, that equals $125,000 in income to you. Form 1099-A reports this transaction to the IRS, and you'll receive a copy as well so you can address the details on your tax return. Who Uses Form 1099-A? The lending institution is responsible for filing Form 1099-A with the IRS and must also provide the borrower with a copy. It must provide copies to each borrower in situations where more than one individual or entity was responsible for paying the loan off. Each borrower is then responsible for reporting that information and their share of the transaction on their personal tax returns. What to Do if You Don’t Receive Form 1099-A Contact your lender if you don't receive a 1099-A by January 31 of the year following the year of foreclosure. The institution has this long to provide you with a copy, although the form isn't due to the IRS until February 28. You can also contact the lender if you think the information on your form is incorrect. The 1099-A statement should include the identity and contact information for an individual with the institution whom you can reach out to with questions. Note You might (and in some cases should) receive multiple Forms 1099-A for a single property if you had more than one mortgage or lien against it, and more than one lender was involved in the foreclosure. How to Read Form 1099-A You'll need the selling date and the sales price of the foreclosed property to report the foreclosure to the IRS, and you'll find this information on the 1099-A. You'll use either the fair market value of the property or the outstanding loan balance at the time of the foreclosure for the sales price. The outstanding loan balance can be found in box 2 of the 1099-A, and the property's fair market value is located in box 4. The date of the foreclosure is indicated in box 1, and this will be used as the selling date. Taxpayers must also know whether the loan was a recourse or a non-recourse loan. The loan was probably a recourse loan if the lender has checked "yes" in box 5 of Form 1099-A, which reads, "Check if the borrower was personally liable for repayment of the debt." Note A recourse loan allows the lender to pursue you legally for any outstanding balance of your mortgage that remains after it's foreclosed upon and after it has sold your property. Enter the sales price on Schedule D, "Capital Gains and Losses," which should accompany your Form 1040 tax return when you file it. This will be either the amount in box 2 or the amount in box 4. Which box you'll use will depend on the lending laws of the state where the property was located, so check with a local tax professional to make sure you select the correct one. Note Capital gains are reported on Schedule D for homes that were personal residences. The IRS doesn't allow taxpayers to claim capital losses for personal property. Requirements for Reporting a Capital Gain or Loss Any gain—and a foreclosure can occasionally result in a gain—can usually be offset by the capital gains exclusion for a main home, so it’s unlikely that a foreclosure will result in any capital gains tax coming due. You'd have to realize several hundreds of thousands of dollars in "profit" before the capital gains tax would apply. Also called the "Section 121" exclusion, this tax break allows single individuals to realize up to a $250,000 gain on their personal residences without being subject to the capital gains tax. The threshold increases to $500,000 for married taxpayers, but several rules apply to qualifying; for instance, you must have lived in the home for at least two of the previous five years. Note You can calculate your gain by comparing the “sales price” to your purchase price, which is your cost basis in the property. This information can typically be found on the closing statement you received when you purchased the property. The difference between the selling price and your cost basis is your gain. Enter this on Schedule D of your tax return. Use Form 4797 if the foreclosed property was a rental or an investment. You'll probably need the assistance of a tax professional in this case because you must take additional factors into consideration, such as the recapture of depreciation deductions, passive activity loss carryovers, and reporting any final rental income and expenses. Note You must report this 1099-A information even if you're covered by the capital gains exclusion for your primary residence, but you won't take a tax hit unless your gain is more than $250,000 or $500,000, depending on your marital status. Form 1099-A vs. Form 1099-C You might receive Form 1099-C instead of, or in addition to, Form 1099-A if your lender both foreclosed on the property and canceled any remaining mortgage balance that you owed. Forgiven debt reported on Schedule 1099-C is taxable income. You might qualify to exclude it, however, if the total of your debts exceeded the total value of your assets immediately before the time of foreclosure. This means that you're "insolvent," and you must only report canceled debt on your tax return to the extent that it exceeds your insolvency—the difference between your debts and your assets. For example, you might have debts totaling $300,000, and all of your remaining assets might be valued at $200,000. That's a difference of $100,000. If your lender forgave or canceled a $120,000 balance on your mortgage loan, you'd only have to report $20,000 as income—the amount exceeding your $100,000 insolvency. If a debt is nonrecourse, and if you didn't retain the collateral, you don't have cancellation of debt income, according to the IRS. Key Takeaways Form 1099-A reports the "Acquisition or Abandonment of Secured Property” to the IRS when you lose a property to foreclosure.The lender must send a copy to both the IRS and to each borrower on the loan.Borrowers are potentially liable for capital gains tax as well as income tax on any unpaid portion of a foreclosed mortgage.Borrowers must report Form 1099-A information on Schedule D of their tax returns as capital gains. Was this page helpful? Thanks for your feedback! Tell us why! Other Submit Sources The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy. Internal Revenue Service. "Topic No. 432 Form 1099-A (Acquisition or Abandonment of Secured Property) and Form 1099-C (Cancellation of Debt)." Internal Revenue Service. "Instructions for Forms 1099-A and 1099-C (Rev. January 2022)," Pages 1-2. Internal Revenue Service. "2022 General Instructions for Certain Information Returns," Page 26. IRS. "Instructions for Forms 1099-A and 1099-C (Rev. January 2022)," Page 1. Internal Revenue Service. "Form 1099-A: Acquisition or Abandonment of Secured Property (Revised January 2022)," Page 3. Internal Revenue Service. "Recourse vs. Nonrecourse Debt." Internal Revenue Service. "Capital Gains and Losses – 10 Helpful Facts to Know." Internal Revenue Service. "Topic No. 701 Sale of Your Home." Internal Revenue Service. "About Schedule D (Form 1040), Capital Gains and Losses." Internal Revenue Service. "About Form 4797, Sales of Business Property." Internal Revenue Service. "About Publication 4681, Canceled Debts, Foreclosures, Repossessions, and Abandonments (For Individuals)."