Form 1099-A: Acquisition or Abandonment of Secured Property

Form 1099-A, Acquisition or Abandonment of Secured Property, is an informational tax form filed by lenders to report the transfer of property due to foreclosure or abandonment.

When is a 1099-A Issued?

A. Foreclosure: When a lender takes possession of the property because the borrower defaults on the loan.

B. Abandonment: When the borrower stops making payments and leaves the property without notifying the lender. In this case, the lender might consider the property abandoned even if no formal legal steps are taken.

Who Must File Form 1099-A?

  • Financial institutions (banks, credit unions, etc.)
  • Government agencies
  • Certain corporations lending money regularly
  • Organizations whose main business is lending money

What to Report (Form 1099-A)?

  • Lender acquiring an interest in secured property due to foreclosure or abandonment
  • Borrower information
  • Date of acquisition or knowledge of abandonment
  • Balance of principal outstanding
  • Fair market value (FMV) of property (in some cases)
  • Description of the property

How Does a 1099-A Affect Your Taxes?

  • The forgiven debt amount reported on the 1099-A may be considered taxable income by the IRS.
  • You will need the information on the 1099-A to determine capital gains or losses from the property disposition.
  • You'll report these gains/losses on relevant tax forms like Schedule D (Form 1040) or Form 4797 (business property).

What to Do if You Receive a 1099-A?

A. Compare the form to your records: Ensure the information on the 1099-A matches your understanding of the situation.

B. Consult a tax professional: They can advise you on how the information on the 1099-A affects your tax return and help you determine any potential tax benefits.