Form 1099-A: Acquisition or Abandonment of Secured Property explained
IRS Form 1099-A is a notice from your lender that they took back your property (like a home or car) through foreclosure or repossession, or that they believe you abandoned it. It shows the date this happened, how much you still owed, and the property’s estimated value - information you may need to figure out any tax gain or loss.
Form 1099-A is used when a lender acquires an interest in property that secures a debt (for example, via foreclosure) or has reason to know the property was abandoned.
If the lender also cancels (forgives) part of the debt, you may separately receive Form 1099-C for cancellation of debt (when reporting rules apply).
NOTE! Receiving a Form 1099-A does not necessarily mean that the borrower owes any taxes, but it is a document that should be reviewed carefully to determine if there are any tax implications.
If a borrower defaults on a loan and the lender cancels or forgives a portion of the debt, this may be reported on Form 1099-A as a "canceled debt."
What does "canceled debt" mean?
Canceled debt is generally considered to be taxable income, unless the borrower is insolvent or the debt is dischargeable in bankruptcy.
If the borrower is insolvent, which means that their liabilities exceed their assets, the canceled debt may not be taxable. If the debt is dischargeable in bankruptcy, it may also not be taxable.
If you have received a Form 1099-A that reports canceled debt, you should consult a tax pro or refer to IRS guidelines to determine whether the canceled debt is taxable and, if so, how to report it on your tax return.
NOTE! It's important to accurately report canceled debt on your tax return to avoid potential penalties or issues with the IRS.
Canceled debt rules: When Form 1099-C applies
Sometimes a foreclosure or abandonment triggers both a property “disposition” (Form 1099-A) and a debt cancellation event (Form 1099-C). But they’re not the same thing:
- Form 1099-A = lender took the property (or learned it was abandoned).
- Form 1099-C = lender canceled (forgave) $600+ of debt and has a reportable cancellation event.
In some cases, the lender can satisfy reporting by filing only Form 1099-C (and using certain boxes to cover what 1099-A would show).
| Category | Details |
|---|---|
| When Form 1099-C is issued | A creditor generally files Form 1099-C when $600+ of a debt is canceled and a reportable cancellation event occurs (with special rules for certain lenders/entities). |
| How Box 5 affects the tax result | Box 5 (personally liable) helps tell if the loan was recourse (checked) or nonrecourse (not checked). That changes how you calculate the outcome—not just “taxable vs not taxable.” |
| If you’re personally liable (recourse debt; Box 5 checked) | Foreclosure can create two possible pieces: (1) gain/loss on the “sale” (often based on FMV), and (2) canceled-debt (COD) income if any remaining debt is forgiven (unless an exclusion applies). |
| If you’re not personally liable (nonrecourse debt; Box 5 not checked) | Foreclosure generally creates no COD income. Instead, the amount realized generally includes the full unpaid nonrecourse debt, which may create gain/loss. |
| Exclusions that may reduce COD income (when COD exists) | Bankruptcy and insolvency exclusions can allow you to exclude some/all COD income if you qualify. |
| Principal residence exclusion (QPRI) - timing update | The qualified principal residence indebtedness exclusion generally does not apply to discharges completed or discharge agreements entered into after Dec 31, 2025 (so it’s not “through 2026” under current IRS guidance). |
Pro tip: If you receive Form 1099-A, look for a Form 1099-C too—but remember: 1099-A ≠ debt canceled. You only have COD income if the debt was actually canceled (and not excluded).
Who can file Form 1099-A?
Form 1099-A is typically filed by lenders who have acquired or abandoned secured property.
This could include banks, credit unions, mortgage companies, and other financial institutions that lend money and secure the loans with real estate or personal property.
There are several copies of Form 1099-A, which is used to report the acquisition or abandonment of secured property.
Here is a breakdown of the different copies:
- Copy A: This copy is filed with the Internal Revenue Service (IRS).
- Copy B: This copy is given to the borrower or recipient of the form.
- Copy C: This one is for the lender's records.
also -
- Copy 1: This copy is sent to the state tax department, if applicable.
- Copy 2: This one is given to the borrower or recipient of the form, if applicable.
It's important to note that these copies are not physically separate forms. Rather, they are different sections or pages of the same form that are used for different purposes.
NOTE! The lender or issuer of the form is responsible for completing and distributing the appropriate copies.
When can I use Form 1099-A?
You can use Form 1099-A if you are a lender and you have acquired or abandoned secured property in a transaction that is not a foreclosure.
For example, if you are a lender and you have taken possession of a property through a deed in lieu of foreclosure, you would use Form 1099-A to report this acquisition to the IRS.
Similarly, if you are a lender and you have released a borrower from the obligation to repay a loan and have taken possession of the property securing the loan, you would use the form to report the abandonment of the property to the IRS.
If you are a borrower and you have received Form 1099-A from a lender, it is important that you review the form carefully and ensure that the information it contains is accurate.
NB! If you believe that the form contains errors or if you have any questions about it, you should contact the lender or seek the advice of a tax professional.
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Reporting Form 1099-A on your taxes step-by-step
When it’s time to file your tax return, follow these steps:
1. Determine if you need to report a gain or loss
Use the smaller of the outstanding loan balance (Box 2) or the fair market value (Box 4) as the property’s “sales price.”
Subtract your adjusted basis (original purchase price + improvements - depreciation).
2. Report on the appropriate Form
- Schedule D (Form 1040): For capital gains or losses if the property was a personal or investment asset.
- Form 4797: For ordinary losses if the property was used for business or abandoned.
3. Include any canceled debt income
If you also received Form 1099-C, report canceled debt as taxable income on Form 1040 unless you qualify for an exclusion (e.g., insolvency).
What are the 6 boxes of Form 1099-A?
The right side of Form 1099-A is divided into six boxes, each of which is used to report specific information about the acquisition or abandonment of secured property.
The boxes are as follows:
- Box 1: The date the lender took the property, or the date they learned you abandoned it.
- Box 2: How much of the loan principal was still unpaid at that time.
- Box 3: Not used (reserved for the future).
- Box 4: The lender’s estimate of the property’s market value.
- Box 5: A checkbox showing whether you were personally responsible for paying the debt (not just the property).
- Box 6: A brief description of the property (for example, an address or vehicle details).
In general, Form 1099-A is used to report information that is relevant to the acquisition or abandonment of secured property, and the specific information that is reported in each box will vary depending on the circumstances of the transaction.
Form 1099-A preview
How to file Form 1099-A?
You generally must provide the borrower a statement by January 31 (or the next business day if it falls on a weekend/holiday). You must file with the IRS by February 28 if filing on paper, or by March 31 if filing electronically.
To file Form 1099-A, you will need to complete the form and include all relevant information about the acquisition or abandonment of the property.
This will include the borrower's name and contact information, the date of the acquisition or abandonment, the fair market value of the property, and any outstanding mortgage or debt on the property.
You will also need to include any cash or other property that was received in connection with the acquisition of the property.
Once you have completed Form 1099-A, you will need to submit it to the IRS either electronically or by mail. If you are required to file 250 or more 1099-A forms, you must file electronically. Otherwise, you can choose to file by mail.
If you are filing by mail, you will need to print out the completed forms and mail them to the IRS. The mailing address will depend on the location of your business and the type of form you are filing.
NB! The IRS provides specific mailing addresses for different forms and locations on its website.
It is important to note that Form 1099-A is not the only form that may be required in connection with the acquisition or abandonment of secured property.
In some cases, you may also need to file Form 1099-C, which is used to report the cancellation of debt.
Pro tips for borrowers reviewing Form 1099-A
- Keep good records: Maintain documentation of the property’s original purchase price, improvements, and depreciation to calculate adjusted basis accurately.
- Understand your liability status: Check Box 5 to see if you were personally liable for the loan. This impacts whether canceled debt is taxable and how you calculate gains or losses.
- Consult IRS publications: Refer to Publication 4681 for canceled debt and Publication 544 for property sales.
- Seek professional advice: Tax rules for Form 1099-A can be complex. Consider consulting a tax professional, especially if you’re dealing with canceled debt, insolvency, or multiple 1099 forms.
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FAQ
To report Form 1099-A, use the information provided in Boxes 2 (outstanding loan balance) and 4 (fair market value) to calculate gain or loss:
- Use Schedule D (Form 1040) if the property was for personal or investment use.
- Use Form 4797 if the property was for business or abandoned.
If canceled debt is involved (Form 1099-C), report it as income on Form 1040 unless you qualify for an exclusion (e.g., insolvency).
Canceled debt is generally treated as taxable income unless an exclusion applies:
- Principal Residence Exclusion: Up to $750,000 of forgiven mortgage debt ($375,000 if married filing separately) is excluded through 2026.
- Insolvency Exclusion: If your total liabilities exceed your total assets, you can exclude canceled debt from taxable income.
Form 1099-A: Reports the foreclosure or abandonment of property.
Form 1099-C: Reports canceled debt of $600 or more, which may be taxable unless an exclusion applies.
In some cases, you may receive both forms for the same property.
If you believe you should have received Form 1099-A but didn’t, contact your lender immediately to request a copy. You’ll need this form to accurately calculate gains, losses, or taxable income from the transaction.
Yes, canceled debt may reduce your refund if it’s added to your taxable income. However, exclusions (e.g., insolvency) can prevent this. Consult a tax professional to determine how canceled debt affects your refund.
If you notice errors on Form 1099-A (e.g., incorrect fair market value or loan balance), contact the lender immediately for a corrected form. Do not file your taxes until you have accurate information.
Yes, canceled debt can be excluded from taxable income if:
- You qualify for the Principal Residence Exclusion or Insolvency Exclusion.
- The debt was discharged in bankruptcy.
