Question

I have a question about 1099-A reporting. If my home was foreclosed and I received a Form 1099-A, what do I do?

Answer

Regarding 1099-A reporting, Form 1099-A reports the sale of your home in foreclosure. To figure the gain or loss:

  1. See 1099-A, Box 5 to figure the sales price — also called the amount realized. If the box is marked “Yes,” you have a recourse loan. If it’s marked “No,” you have a nonrecourse loan.
    • If you have a recourse loan, your sales price will be the lesser of these:
      • Outstanding debt immediately before the foreclosure — 1099-A, Box 2
      • Fair market value (FMV) of the foreclosed property — Box 4

Also, include anything else you received from the sale.

  • If you have a nonrecourse loan, your sales price will be the full amount of the outstanding debt immediately before the foreclosure. This applies even if the FMV of the property is less than the outstanding debt.
  1. Subtract your adjusted basis in the property from the sales price.

Report the gain or loss on Schedule D. If there’s a gain, you might be able to exclude it if it’s your main home. If there’s a loss, you can’t deduct it.

 

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