Form 1099-A: Acquisition or Abandonment of Secured Property (2021)
What the Form Is For
Form 1099-A, Acquisition or Abandonment of Secured Property, is an information return that lenders must file when they acquire an interest in property that secured a loan, or when they know (or have reason to know) the property has been abandoned. The form documents the financial details of this transaction that you'll need to determine if you have taxable gain or loss on the disposition of the property. IRS.gov
Think of secured property as any asset you used as collateral for a loan—your home with a mortgage, a car with an auto loan, or business equipment financed through a lender. When you can no longer maintain payments and the lender takes the property back (foreclosure or repossession) or you simply walk away from it (abandonment), the IRS considers this a "sale" of the property for tax purposes, even though no money changed hands.
The form reports three critical pieces of information:
- The date the lender acquired the property or learned it was abandoned
- The outstanding loan balance (principal only, not including interest or fees)
- The fair market value of the property at that time
You'll use these figures to calculate whether you have a taxable gain or deductible loss from the transaction. IRS Topic 432
Importantly, you don't have to be dealing with a traditional bank to receive this form. Any person or entity that lends money in connection with their trade or business must file Form 1099-A if they acquire or know about the abandonment of secured property—this includes finance companies, credit unions, governmental agencies, and even individuals who regularly lend money as part of their business activities.
When You’d Use It (Including Late and Amended Returns)
Regular Filing Timeline
Lenders must send you Copy B of Form 1099-A by January 31, 2022 (for tax year 2021 events), and they must file Copy A with the IRS by February 28, 2022 (or March 31, 2022 if filing electronically). You'll use the information from Form 1099-A when preparing your 2021 tax return, which was due April 15, 2022.
IRS 2021 Form 1099-A
When You Need to File
You use Form 1099-A information (you don't file the form itself—only lenders do that) when preparing Schedule D (Form 1040) for capital gains and losses if the property was held for personal use or investment, or Form 4797 if the property was used in your business. The transaction must be reported in the tax year when the lender acquired the property or when you abandoned it.
Late or Amended Returns
If you didn't receive your Form 1099-A until after you filed your 2021 return, or if you received a corrected form with different information, you'll need to file an amended return using Form 1040-X. You have three years from the original filing deadline to file an amended return.
First, contact the lender to verify the correct information. If they won't issue a corrected form but you believe the information is wrong, you should still report what you believe are the correct figures and attach an explanation to your return. IRS Instructions
Missing Forms
If you never received Form 1099-A but know property was foreclosed or abandoned in 2021, you're still required to report the transaction on your tax return. Contact the lender to request the form, or use other documentation like foreclosure sale notices or correspondence from the lender to determine the necessary figures.
Key Rules for 2021
Reporting Thresholds
Unlike some other 1099 forms, there's no dollar threshold for Form 1099-A—lenders must file it regardless of the property value or loan amount. However, tangible personal property held for personal use (like your personal car) doesn't require reporting unless it was held for investment or used in a trade or business.
Property Scope
The form applies to real property (homes, land, buildings), intangible property, and tangible personal property used for investment or business.
Personal Liability Matters
Box 5 on the form indicates whether you were "personally liable" for the debt—meaning the lender could pursue you beyond just taking the property.
- Recourse debt (Box 5 checked) → use the fair market value (Box 4)
- Nonrecourse debt (Box 5 not checked) → use the outstanding loan balance (Box 2)
Coordination with Form 1099-C
If the lender also canceled part of your debt in the same calendar year, they might file only Form 1099-C (Cancellation of Debt) instead. You might receive both forms if the events happened in different years or if the lender chooses to file both.
IRS Instructions for Forms 1099-A and 1099-C
Multiple Borrowers
If you borrowed money jointly, each borrower should receive their own Form 1099-A showing the full debt amount if you're jointly and severally liable.
Foreign Property Exception
Lenders don’t need to file Form 1099-A for foreign property if you’ve certified that you’re an exempt foreign person.
Step-by-Step Guide (High Level)
Step 1: Verify the Information
Check each box on the form carefully.
- Box 1: Acquisition or abandonment date
- Box 2: Outstanding principal balance
- Box 4: Fair market value
- Box 5: Personal liability status
- Box 6: Property description
Contact the lender if any detail appears incorrect.
Step 2: Gather Additional Documentation
Collect records showing your adjusted basis in the property (original purchase price + improvements − depreciation). This helps determine gain or loss.
Step 3: Determine Your Amount Realized
If Box 5 is checked (recourse debt) → use FMV (Box 4).
If Box 5 is not checked (nonrecourse) → use debt balance (Box 2).
If you also received Form 1099-C, you may have both a gain/loss and cancellation of debt income.
Step 4: Calculate Gain or Loss
Subtract your adjusted basis from your amount realized.
- Positive result = gain
- Negative result = loss
Losses on personal-use property aren’t deductible.
Step 5: Report on the Correct Tax Forms
Use:
- Schedule D / Form 8949 → personal or investment property
- Form 4797 → business property
- Form 982 → debt exclusion claims (bankruptcy, insolvency, etc.)
See Publication 4681 for guidance.
Step 6: Consider Exclusions and Exceptions
Possible exclusions include:
- Discharge in bankruptcy
- Insolvency
- Qualified principal residence indebtedness
- Qualified farm indebtedness
These rules are complex—professional help is recommended.
Common Mistakes and How to Avoid Them
Mistake #1: Not Reporting the Transaction
Avoid it: Always report Form 1099-A transactions, even if no cash changed hands.
Mistake #2: Using the Wrong Amount Realized
Avoid it:
- Checked Box 5 → use FMV (Box 4)
- Unchecked Box 5 → use Loan Balance (Box 2)
Mistake #3: Ignoring Adjusted Basis
Avoid it: Adjust basis for improvements, depreciation, or losses before calculating gain/loss.
Mistake #4: Missing Cancellation of Debt Income
Avoid it: Compare Boxes 2 and 4; ask if Form 1099-C was filed.
Mistake #5: Deducting Losses on Personal Property
Avoid it: Only investment or business property losses are deductible.
Mistake #6: Incorrect Dates
Avoid it: Use Box 1 date to determine the correct tax year.
What Happens After You File
IRS Processing
The IRS will match your Form 1099-A data with what the lender filed.
Matching Discrepancies
If differences appear, you may receive a CP2000 notice proposing changes.
Refund or Balance Due
Depending on your calculations, you may owe tax or receive a refund. Processing usually takes about 21 days for e-filed returns.
Audit Risk
Foreclosure or abandonment doesn’t automatically trigger an audit, but complex cases may attract scrutiny. Keep records for at least three years.
State Tax Consequences
Check your state’s rules for cancellation of debt reporting—they may differ from federal.
Future Tax Year Impacts
If you claimed insolvency or bankruptcy exclusions, you may need to adjust tax attributes using Form 982 in later years.
FAQs
Q1: I received Form 1099-A for my home that was foreclosed. Do I have to pay taxes on it?
Not necessarily. It depends on whether you had a gain or loss, the debt type, and whether you qualify for exclusions like insolvency or home-sale gain exclusions.
Q2: What if I receive both Form 1099-A and Form 1099-C?
You may have two tax consequences:
- Gain/loss on property disposition (1099-A)
- Cancellation of debt income (1099-C)
Avoid double-counting. See Publication 4681 for worksheets.
Q3: The fair market value on my Form 1099-A seems wrong. Can I dispute it?
Yes. Gather documentation (appraisals, comps) and request a corrected form. If denied, report your correct value with an attached explanation.
Q4: What’s the difference between abandonment and foreclosure?
Foreclosure: Legal transfer of title to the lender.
Abandonment: You walk away, and the lender discovers it. Timing of reporting differs slightly.
Q5: I was a co-borrower. Do I still need to report it?
Yes. Each borrower must report their share (typically 50/50) unless ownership percentages differ.
Q6: Can I skip reporting if I didn’t make money?
No. You must report all 1099-A transactions, even with a loss.
Q7: The property was foreclosed in 2021 but I received Form 1099-A in 2022. What now?
File an amended 2021 return (Form 1040-X). You have three years from the original due date to amend.
For More Information:
See Publication 4681, Publication 523, and Publication 544.
If your case is complex, consult a tax professional.
