1099 S Form | 1099-S Form | 1099-S Forms

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If you sold real estate during the tax year, you may receive Form 1099-S. Below is everything you need to know about IRS Form 1099-S reporting.

What is a 1099-S Form?

IRS Form 1099-S is used to report proceeds from a real estate transaction. The following are the types of real estate for which a Form 1099-S may be issued:

Land
Permanent structures
Apartments
Condominiums

Who Must File Form 1099-S?

Generally, the person responsible for closing the transaction, as explained in (1) below, is required to file Form 1099-S. If no one is responsible for closing the transaction, the person required to file Form 1099-S is explained in (2), later. However, you may designate the person required to file Form 1099-S in a written agreement, as explained under (3), later.

If you are the person responsible for closing the transaction, you must file Form 1099-S. If a Closing Disclosure prescribed under the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) is used and a person is listed as the settlement agent on the closing disclosure, the person responsible for closing the transaction is the person listed as the settlement agent on that closing disclosure. The Closing Disclosure combines and replaces the HUD-1 Settlement Statement and the final Truth-in-Lending (TIL) statement under the Real Estate Settlement Procedures Act (RESPA) of 1974, as amended, and the Federal Truth in Lending Act, which is contained in title I of the Consumer Credit Protection Act, as amended (15 U.S.C. 1601). The form incorporates the information provided on the Loan Estimate. A closing disclosure includes any amendments, variations, or substitutions that may be prescribed under Dodd-Frank if any such form discloses the transferor and transferee, the application of the proceeds, and the identity of the settlement agent or other person responsible for preparing the form.

If the closing disclosure is not used, or no settlement agent is listed, the person responsible for closing the transaction is the person who prepares a closing disclosure that identifies the transferor and transferee, reasonably identifies the real estate transferred, and describes how the proceeds are to be or were disbursed.

If no closing disclosure is used, or if two or more closing disclosures are used, the person responsible for closing the transaction is, in the following order:

The transferee’s attorney who is present at the delivery of either the transferee’s note or a significant part of the cash proceeds to the transferor or who prepares or reviews the preparation of the documents transferring legal or equitable ownership.
The transferor’s attorney who is present at the delivery of either the transferee’s note or a significant part of the cash proceeds to the transferor or who prepares or reviews the preparation of the documents transferring legal or equitable ownership; or
The disbursing title or escrow company that is most significant in disbursing gross proceeds.

If there is more than one attorney described in (a) or (b), the one whose involvement is most significant is the person considered responsible for closing the transaction.

If no one is responsible for closing the transaction as explained in (1) above, the person responsible for filing is, in the following order: (a) the mortgage lender, (b) the transferor’s broker, (c) the transferee’s broker, or (d) the transferee.

For purposes of (2) above, apply the following definitions.

Mortgage lender means a person who lends new funds in connection with the transaction, but only if the loan is at least partially secured by the real estate. If there is more than one lender, the one who lends the newest funds is the mortgage lender. If several lenders advance equal amounts of new funds, and no other person advances a greater amount of new funds, the mortgage lender is the one who has the security interest that is most senior in priority. Amounts advanced by the transferor are not treated as new funds.
Transferor’s broker means the broker who contracts with the transferor and who is compensated for the transaction.
Transferee’s broker means the broker who significantly participates in the preparation of the offer to acquire the property or who presents such offer to the transferor. If there is more than one such person, the transferee’s broker is the one who most significantly participates in the preparation of the acquisition offer. If there is no such person, the one who most significantly participates in the presentation of the offer is the transferee’s broker.
Transferee means the person who acquires the greatest interest in the property. If no one acquires the greatest interest, the transferee is the person listed first on the ownership transfer documents.
Designation agreement. You can enter into a written agreement at or before closing to designate who must file Form 1099-S for the transaction. The agreement will identify the person responsible for filing if such designated person signs the agreement. It is not necessary that all parties to the transaction (or that more than one party) enter into the agreement.

You may be designated in the agreement as the person who must file if you are the person responsible for closing the transaction (as explained in (1) under Who Must File, earlier), the transferee’s or transferor’s attorney (as explained in (1) under Who Must File, earlier), the title or escrow company that is most significant in disbursing gross proceeds, or the mortgage lender (as explained in (2a) under Who Must File, earlier).

The designation agreement may be in any written form and may be included on the closing disclosure. It must:

Identify by name and address the person designated as responsible for filing,
Include the names and addresses of each person entering into the agreement,
Be signed and dated by all persons entering into the agreement,
Include the names and addresses of the transferor and transferee, and
Include the address and any other information necessary to identify the property.

Each person who signs the agreement must keep it for 4 years.

Who Typically Files Form 1099-S

This form is filed typically by the title company or the closing agent any time there is an exchange of real estate, whether it’s a sale or exchange. The filer will need the following information to report Form 1099-S:

The seller’s name, address, and phone number
The seller’s tax identification number or social security number
Transferor’s name, address, and phone number
Transferor’s tax identification number or social security number
The address of the sold or exchanged property
Date of closing
The gross proceeds of the sale
Indication if transferor received property or services as part of sale
Indication if transferor is a foreign person, partnership, estate, or trust
Amount buyer paid in real estate tax

When Do I Have to Report Form 1099-S?

You must report Form 1099-S when you file your individual tax return, including any request an extension. If you don’t file your 1099-S on time, then the IRS can begin imposing penalty fees. The best way to make sure your Form 1099-S is properly completed on time is to enlist the help of a tax professional when you’re buying or selling property.

What is a 1099-S Form Used For?

The main purpose of IRS Form 1099-S is to ensure that sellers is reporting capital gains or ordinary income on their tax return.

Personal Use

If you’re reporting Form 1099-S because you sold your primary residence or timeshare or vacation property, then you’ll report the sale of the home on Form 8949 and Schedule D..

Investment Use

If you’re filing Form 1099-S for investment property or inherited property, you’ll report the sale on Form 8949 and Schedule D.

Business or Rental Use

If you’re filing Form 1099-S for the sale of a business or rental property, you’ll report the sale on IRS Form 4797 and on Form 8949 and Schedule D.

How to Complete Form 1099-S

The process for reporting Form 1099-S is different depending on whether you’re the buyer or the seller.

IRS Form 1099-S Reporting Process When Buying

There are a few different ways you can handle the 1099-S Form if you’re buying property;

First, you can include a “designation clause” in the purchase agreement that makes the seller responsible for reporting IRS reporting on the sale.
Ask the seller to complete IRS Form W-9 and part of the closing package. Once the W-9 is completed, it’ll have all the information you need to file Form 1099-S.

If you aren’t able to secure a designation clause or if you’re unable to get the W-9, you can put together a “letter of instruction” and send all of the appropriate forms for the seller to fill out for you. A qualified tax professional can help you in this process.

IRS Form 1099-S Reporting Process When Selling

When you’re selling a property, you’ll file your own Form 1099-S because you’ve got all the information that’s required to file on. Complete all the information on the form, and also complete Form 1096. If you’re selling multiple properties, you need to fill out separate 1099-S forms, but you only need to fill out one Form 1096

When Do I Have to Report Form 1099-S?

You must report Form 1099-S when you file your individual tax return, although you can always request an extension. If you don’t file your 1099-S on time, then the IRS can begin imposing penalty fees. The best way to make sure your Form 1099-S is properly completed on time is to enlist the help of a tax professional when you’re buying or selling property.