Form 1099-A: Property Acquisition or Abandonment
Form 1099-A is issued when a lender acquires property through foreclosure, deed-in-lieu, or the borrower abandons the secured property. It triggers important tax reporting obligations for the borrower.
What It Reports
- Box 1: Date of acquisition or abandonment
- Box 2: Outstanding loan balance
- Box 4: Fair market value of the property
- Box 5: Whether the borrower was personally liable (recourse)
Tax Consequences
- Deemed sale: borrower may have capital gain or loss
- Recourse loans: amount realized = FMV; excess debt may be cancelled
- Nonrecourse loans: amount realized = loan balance
- Cancelled debt may be taxable income (reported on 1099-C)
Exclusions
- Insolvency at time of forgiveness
- Principal residence exclusion (up to $750,000)
- Discharge in bankruptcy
Related Terms
- Encumbrance — The foreclosed mortgage
- Equity — Negative equity triggering foreclosure
- Closing — Deed-in-lieu closing procedures
Barnes Walker Foreclosure Defense
Barnes Walker's attorneys advise Florida homeowners on the tax consequences of foreclosure and negotiate alternatives. Request a legal inquiry for assistance.
Reviewed by the attorneys at Barnes Walker, Goethe, Shea & Robinson, PLLC