Form 1099-A: Acquisition or Abandonment of Secured Property (2019)

A Simple Guide for Borrowers

When you borrow money to buy property—like a house or business equipment—the lender often requires the property itself as collateral (security) for the loan. If you lose that property through foreclosure or you abandon it, the IRS considers this a “taxable event” that must be reported. Form 1099-A is the document your lender sends to both you and the IRS to report this situation.

What the Form Is For

Form 1099-A is an information return that lenders must file when they acquire secured property from a borrower (such as through foreclosure) or when they know the borrower has abandoned secured property. Think of it as the official notice that the property securing your loan is no longer yours. IRS.gov

Who sends it: Your lender, bank, credit union, or other financial institution that held your loan.

Who receives it: You (the borrower) receive Copy B, while the IRS receives Copy A. The form shows critical information including the date of acquisition or abandonment, your outstanding loan balance (principal only), the fair market value of the property, and whether you were personally liable for the debt.

Why it matters: This form triggers potential tax consequences. You may have a gain or loss on the property disposition that must be reported on your personal tax return using Schedule D (for personal property) or Form 4797 (for business property). Additionally, if part of your debt was forgiven, you might receive a separate Form 1099-C for cancellation of debt, which could create taxable income. IRS Topic 432

When You’d Use It (Late/Amended)

Original Filing

For the 2019 tax year, lenders were required to file Form 1099-A with the IRS by February 28, 2020 (paper filing) or March 31, 2020 (electronic filing). They must have provided you with your copy by January 31, 2020. 2019 General Instructions

If You Receive a Late Form

If your lender sends you a Form 1099-A after you've already filed your 2019 tax return, you'll need to file an amended return using Form 1040-X. You typically have three years from the original filing deadline to amend your return. For 2019 returns, the IRS extended this deadline to July 17, 2023, giving additional time for corrections.

Corrected Forms

If your lender discovers an error—such as an incorrect property value or wrong debt amount—they'll issue a corrected Form 1099-A with the “CORRECTED” box checked. You should review the corrected information carefully and amend your tax return if you've already filed. Compare the corrected form against your original to identify specific changes.

Your Responsibility

As the borrower, you don't file Form 1099-A with the IRS—your lender does. However, you must use the information from this form to correctly report the property disposition on your personal tax return (Form 1040 and associated schedules).

Key Rules for 2019

Minimum Reporting Threshold

There's no dollar minimum for Form 1099-A. If the lender acquires the property or knows you abandoned it, they must file the form regardless of the amounts involved. 2019 Instructions for Forms 1099-A and 1099-C

What Qualifies as “Property”

Real estate (homes, land, commercial buildings), business equipment, vehicles used for business or investment, and intangible property all qualify. However, personal-use items like your car (if not used for business) don't require reporting. The property must be either totally or partially held for business or investment purposes.

Acquisition vs. Abandonment

Acquisition occurs when the lender actually takes title to the property (foreclosure, deed in lieu of foreclosure, or similar action). The date is when title transfers or the redemption period expires.
Abandonment happens when you permanently discard the property with no intention to return. The lender must have “reason to know” about the abandonment—objective facts and circumstances indicating you've walked away. If a third party buys the property at foreclosure sale, it's automatically treated as abandoned.

Recourse vs. Nonrecourse Debt

Box 5 of Form 1099-A indicates whether you were “personally liable” for the debt:

Recourse debt (box checked): You're personally liable, meaning the lender could pursue you for any deficiency. Your “amount realized” for tax purposes equals the property's fair market value.
Nonrecourse debt (box unchecked): You're not personally liable; the lender can only take the property. Your “amount realized” equals the entire loan balance, regardless of property value.

This distinction is crucial for calculating your gain or loss on the property disposition.

Coordination with Form 1099-C

If your lender cancels $600 or more of debt in the same calendar year as the acquisition/abandonment, they may file only Form 1099-C (Cancellation of Debt) instead of both forms. Form 1099-C would include the property information in boxes 4, 5, and 7. This streamlines reporting but means you must carefully review whichever form(s) you receive. IRS Instructions

Step-by-Step (High Level)

Step 1: Receive and Review Your Form 1099-A

By January 31, 2020, your lender should have mailed you Copy B. Verify all information is correct, especially:

Box 1: Date of lender's acquisition or your abandonment
Box 2: Balance of principal outstanding (not including interest or fees)
Box 4: Fair market value of the property
Box 5: Whether you were personally liable (checkbox)
Box 6: Description of the property

Step 2: Check for Errors

If anything looks wrong, contact your lender immediately to request a corrected form. Common errors include incorrect property values (appraisals versus sale prices) or wrong debt balances.

Step 3: Determine Your Tax Consequences

Impact #1: Gain or Loss on Disposition

Calculate your adjusted basis in the property (original cost plus improvements minus depreciation)
Determine your “amount realized” (fair market value for recourse debt; loan balance for nonrecourse debt)
Subtract basis from amount realized to find gain or loss
Report on Schedule D (capital property) or Form 4797 (business property)

Impact #2: Cancellation of Debt Income

If you received Form 1099-C in addition to Form 1099-A, or if Form 1099-C includes the property information, you may have cancellation of debt (COD) income
COD income is generally taxable but may qualify for exclusions (bankruptcy, insolvency, qualified principal residence debt for 2019)
Use Form 982 to claim applicable exclusions

Step 4: Gather Supporting Documents

Collect records of your original purchase price, improvements made, depreciation claimed (if business property), insurance proceeds received, and any payments made toward the debt.

Step 5: Report on Your Tax Return

Include the disposition and any COD income on your 2019 Form 1040. Most taxpayers will need professional help, especially for business property or complex situations involving both gain/loss and COD income.

Step 6: Keep Records

Retain Form 1099-A and all supporting documentation for at least three years after filing (longer if you had substantial losses or claimed exclusions).

Common Mistakes and How to Avoid Them

Mistake #1: Ignoring the Form Entirely

Some taxpayers think that losing a home means no tax reporting is needed. Wrong! Even if you have a loss, you must report the transaction. While losses on personal-use property aren't deductible, you still need to report the disposition to avoid IRS inquiries.

Mistake #2: Confusing Recourse and Nonrecourse Debt

This Box 5 checkbox determines how you calculate your amount realized. Using the wrong figure can drastically change your gain or loss. If unsure, review your original loan documents or consult a tax professional.

Mistake #3: Forgetting to Reduce Basis by Prior Depreciation

If you claimed depreciation deductions for business use or rental property, you must reduce your basis accordingly. Failing to do so understates your gain (or overstates your loss).

Mistake #4: Not Claiming Available Exclusions for COD Income

For 2019, qualified principal residence indebtedness forgiven could be excluded from income under certain conditions. Many taxpayers miss this exclusion and unnecessarily pay tax on forgiven debt. Review Form 982 carefully or get professional advice.

Mistake #5: Reporting Interest or Fees in Calculations

Box 2 shows principal only—it doesn't include accrued interest, late fees, or foreclosure costs. Don't add these amounts when calculating your tax liability.

Mistake #6: Using the Wrong Reporting Schedule

Personal-use property goes on Schedule D; business property goes on Form 4797. Rental property may involve both forms depending on depreciation recapture. Using the wrong form can trigger processing delays or errors.

Mistake #7: Assuming Fair Market Value Equals the Foreclosure Sale Price

For foreclosures, the gross foreclosure bid price is generally treated as FMV (Box 4). For abandonments, it's the appraised value. Don't substitute your own estimate—use what the lender reports unless you have documented evidence it's wrong.

What Happens After You File

IRS Matching

The IRS receives Copy A of your Form 1099-A and uses computers to match it against your tax return. They look for the disposition to be properly reported on Schedule D or Form 4797. Mismatches trigger automated notices.

Potential Notices

If the IRS doesn't see the transaction reported or finds discrepancies, you'll receive a letter (typically CP2000) proposing changes and additional tax. You'll have an opportunity to respond with explanations and documentation.

Audit Considerations

Foreclosures and abandonments can increase audit risk, particularly when large losses are claimed or when COD income exclusions are applied. Keep excellent records. The IRS may request proof of your original basis, improvements, or insolvency status.

State Tax Implications

Most states follow federal treatment for Form 1099-A transactions, but some have different rules for COD income exclusions. Check your state's requirements separately.

Credit Implications

While not a direct tax consequence, foreclosures and abandonments appear on credit reports and impact your ability to borrow in the future. The tax reporting is separate from credit reporting, but both result from the same event.

Future Refinancing or Sales

If you later repurchase property or settle with the lender, you may receive additional tax forms. Each transaction stands alone for reporting purposes.

FAQs

Q1: I Received Form 1099-A but Also Form 1099-C. Do I Report Both?

Review both forms carefully. If they're for the same debt and property, you'll typically report the information from Form 1099-C, which combines the acquisition/abandonment information with the debt cancellation. Don't double-report the same transaction. If they're for different debts, report each separately according to its instructions.

Q2: The Fair Market Value in Box 4 Seems Too Low. Can I Use a Different Amount?

Generally, you should use the FMV shown on Form 1099-A unless you have solid documentation (like an independent appraisal from around the same date) proving it's incorrect. First, request a corrected form from your lender with supporting evidence. If they won't correct it and you use a different value, be prepared to defend your position with documentation if audited.

Q3: I Abandoned My Home in 2019, but the Foreclosure Sale Didn't Happen Until 2020. Which Year Do I Report?

Report in 2019 if your lender sent you a Form 1099-A for 2019 showing the abandonment date. The taxable event is typically the earlier of when the lender had reason to know of abandonment or when they acquired the property. Your Form 1099-A date in Box 1 determines the reporting year.

Q4: Will I Owe Taxes on a Foreclosure Even Though I Lost Money?

It depends. You might have two separate tax impacts: (1) a loss on the property disposition (generally not deductible if personal-use property, but deductible if investment or business property), and (2) taxable income from forgiven debt (COD income). You could simultaneously have a nondeductible loss and taxable COD income—an unfortunate double hit. However, exclusions may apply to reduce or eliminate the COD income, especially for qualified principal residence debt or if you were insolvent.

Q5: My Form 1099-A Shows I Wasn’t Personally Liable (Box 5 Unchecked), but I Think I Was. Does It Matter?

Yes, it matters significantly for your tax calculation. Review your original loan documents to verify. If you signed a promissory note that didn’t limit recourse to the property alone, you were probably personally liable. Contact your lender immediately to request a corrected form if the box is wrong, as this changes your amount realized and your entire gain/loss calculation.

Q6: I Didn’t Receive Form 1099-A, but I Know My Property Was Foreclosed. What Should I Do?

Contact your lender immediately to request the form. If they won't provide it or claim they weren't required to file, you still must report the disposition on your tax return using the best information you have. Document your attempts to obtain the form. You can estimate the FMV using comparable sales or appraisals and calculate your gain or loss accordingly.

Q7: Can I Deduct Foreclosure Costs, Attorney Fees, or Unpaid Property Taxes?

Generally, no. These costs aren't separately deductible and don't affect your gain or loss calculation. Property taxes you paid before foreclosure may have been deductible on Schedule A if you itemized, but taxes you owed at foreclosure typically aren't deductible. Attorney fees for personal matters (including defending against foreclosure) aren't deductible either. Business property may have different rules—consult a tax professional.

Additional Resources

IRS Publication 4681 — Canceled Debts, Foreclosures, Repossessions, and Abandonments
IRS Publication 544 — Sales and Other Dispositions of Assets
Form 982 — Use to claim exclusions from cancellation of debt income
IRS Topic 432 — Overview of Form 1099-A implications

This guide is for educational purposes and based on 2019 tax rules. Tax laws change, and individual circumstances vary. For specific advice about your situation, consult a qualified tax professional.