Taxes Tax Planning What Is Form 1099-A? By William Perez Updated on February 18, 2023 Reviewed by Michelle P Scott In This Article View All In This Article How Form 1099-A Works 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 FAQs Photo: SeanShot / E+ / Getty Images Definition Form 1099-A is used to report foreclosure on property to the government and homeowners. 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. Key Takeaways Form 1099-A is reported to the IRS when you lose 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. How Form 1099-A Works Form 1099-A reports the acquisition or abandonment of secured property, often a home you sold through foreclosure or a short sale. Your mortgage lender will give one to you if your home is foreclosed upon because you'll need it to prepare your tax return. The IRS sometimes treats a foreclosure like you 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. An Example of Form 1099-A Maybe you borrowed $150,000 to purchase your home, then you encountered some financial difficulty. As a result, you couldn't make your mortgage payments. The lender forecloses on your property. The IRS takes the position that you received $125,000 in income if you still owed $125,000 at the time the lender foreclosed, and if you're no longer liable for repaying it. Your lender uses Form 1099-A to report this transaction to the IRS. You'll receive a copy, too, so you can address the details of the event on your tax return. IRS Who Uses Form 1099-A? The lending institution is responsible for filing Form 1099-A with the IRS and it must also provide you with a copy. The lender must provide copies to each borrower in situations where more than one individual or entity was responsible for paying the loan off. The borrowers are 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 You should receive a 1099-A by Jan. 31 of the year following the year of foreclosure. Contact your lender if you don't. The institution has this long to provide you with a copy, although the form isn't due to the IRS until Feb. 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. You can reach out to this person with any 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 if more than one lender was involved in the foreclosure. How To Read Form 1099-A Form 1099-A is a relatively simple form. The left side of the form includes the lender's contact information and tax identification number (TIN), and your name, address, and loan account number. You'll find the outstanding loan balance in box 2 on the right side of Form 1099-A. The property's fair market value appears in box 4. The foreclosure date is in box 1. This will be used as the selling date. The form indicates whether the loan was a recourse or a non-recourse loan. The loan was probably a recourse loan if the lender checked "Yes" in box 5 of Form 1099-A, which reads, "Check if the borrower was personally liable for repayment of the debt." Box 6 is where the lender will describe the property, which often includes the property's address. Important 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 your property has been sold. You'll need the selling date (the date of foreclosure) and the "sales price" of the foreclosed property to report the foreclosure to the IRS when you file Schedule D. You'll find this information on the 1099-A. You'll use either the outstanding loan balance at the time of the foreclosure (box 2) or the fair market value of the property (box 4) for the sales price. Which box you'll use will depend on the lending laws of the state where the property was located. 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 result in a gain—can sometimes be offset by the capital gains exclusion for a main home. 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 a capital gains tax. The threshold increases to $500,000 for married taxpayers. But several rules apply to qualifying, such as that you must have lived in the home for at least two of the last five years. You can calculate your gain by comparing the sale 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. Enter this on Schedule D of your tax return. Use IRS 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, and if you qualify for the Section 121 exclusion. Form 1099-A vs. Form 1099-C You might receive Form 1099-C or both a 1099-A and 1099-C if your lender canceled any remaining mortgage balance that you owed. Forgiven debt reported on Schedule 1099-C is taxable income. The canceled debt might not be taxable, however, if the total value of your debts exceeded the total value of your assets immediately before the time of foreclosure. This means that you were 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. You might have debts totaling $300,000, and all your remaining assets might be valued at $200,000. That's a difference of $100,000. You'd only have to report $20,000 as income, or the amount exceeding your $100,000 insolvency, if your lender forgave or canceled a $120,000 balance on your mortgage loan, . Frequently Asked Questions (FAQs) Is a 1099-A a form of income? Generally speaking, no. The only gross income in play is typically forgiven debt that's reported on Form 1099-C if you receive both that form and a 1099-A as a result of a foreclosure on your home. But even forgiven debt wouldn't be taxable if you were insolvent at the time of the sale. Will a 1099-A affect my tax return? A 1099-A will affect your tax return in some cases because the foreclosure creates a capital gain. You may be able to avoid paying taxes on the capital gain if the home was your main home, you lived in it for a total of two of the past five years, and the gain was less than $250,000 if you file single and $500,000 if you file married filing jointly. But some other rules can apply. 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. IRS. "Topic No. 432 Form 1099-A (Acquisition or Abandonment of Secured Property) and Form 1099-C (Cancellation of Debt)." IRS. "Instructions for Forms 1099-A and 1099-C (Rev. January 2022)." Pages 1-2. IRS. "2022 General Instructions for Certain Information Returns." Page 26. IRS. "Instructions for Forms 1099-A and 1099-C (Rev. January 2022)." Page 1. IRS. "Form 1099-A: Acquisition or Abandonment of Secured Property (Revised January 2022)." Page 3. IRS. "Recourse vs. Nonrecourse Debt." IRS. "Capital Gains and Losses—10 Helpful Facts to Know." IRS. "Topic No. 701 Sale of Your Home." IRS. "About Schedule D (Form 1040), Capital Gains and Losses." IRS. "About Form 4797, Sales of Business Property." IRS. "About Publication 4681, Canceled Debts, Foreclosures, Repossessions, and Abandonments (For Individuals)." IRS. "2022 Instructions for Schedule D (2022)." Click "Sale of Your Home" in left sidebar.