What the Heck is IRS Form 1099-S v0.9.1

REtipster provides real estate guidance — not tax or investment advice.

This article should not be interpreted as financial advice. Always seek the help of a licensed financial professional before taking action.

1099-S 2020In this blog post, we’re going to talk about a strange little document called IRS Form 1099-S.

This form is an important (and often overlooked) step in the closing process for most real estate transactions, and if you’re in the practice of closing deals yourself, this is something you probably ought to be doing.

Why is IRS Form 1099-S Necessary?

The purpose of IRS Form 1099-S is to ensure that sellers are reporting their full amount of capital gains on each year’s tax return (and thus, paying the appropriate amount of taxes to the IRS).

For example, if someone buys an investment property for $100,000 and sells it for $150,000 (giving them $50,000 of capital gains income) – they’re supposed to report this as taxable income at the end of each year… but if they don’t, the 1099-S will act as a safeguard by keeping the IRS informed about what’s going on.

Disclaimer: Before we get much further into this, please be aware that I am not an attorney or a CPA, and the information in this article should not be interpreted as legal or financial advice. Everything you read here is based on my own conclusions after reading the IRS Instructions for Form 1099-S (and given how convoluted these instructions are, it’s entirely possible that a CPA or attorney will have a different opinion than me). Be sure to cross-check this information with a tax professional before you move forward.

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Who Has to File IRS Form 1099-S?

Depending on the sale price, who acts as the closing agent, who the seller is, what kind of property is being bought and sold (among other things), there may be some differences in who is responsible for filing the 1099-S. 

Here’s the good news:

  • If you close a transaction with a title company or attorney (as most people do), they will collect the necessary information and file the Form 1099-S for you.
  • If the seller certifies that the sale price is for $250K or less, and the sale is for their principal residence, the transaction is not reportable.
  • If the “transferor” (seller) is a corporation or a government unit (e.g. – if the property is sold at a county auction), the transaction is not reportable.
  • If the total money, services, and property received are less than $600, the transaction is not reportable.

There are a few other exceptions, but these are the most common. Read the full instructions for Form 1099-S at the IRS website for specific details.

Here’s the bad news:

If the transaction doesn’t fall within one of these exceptions, and if you are facilitating the closing yourself, the IRS will likely expect you to file the Form(s) 1099-S, since the IRS instructions state (in fairly unclear terms) that “the person responsible for closing the transaction” is required to file Form 1099-S.

Interestingly, the IRS will allow you to designate the person required to file Form 1099-S in a written agreement, as per this excerpt from their instructions…

Who Must File 1099s

As we move on to Section 3, it says…

Designation 1099s 1

This section goes on to say,

Designation 1099s 2

Under these parameters, a purchase agreement seems to be an ideal document that can be written to include ALL of the above information.

Designating the Responsible Party

In transactions where I am the buyer, I can easily include a clause in my purchase agreement that identifies the Seller as the responsible party for any IRS reporting required as a result of their receipt of funds related to the transaction.

Here’s an example of what this clause could look like:

Screen Shot 2016-05-27 at 2.17.57 PM

With this kind of language included in my purchase agreement, the seller can agree to bear the responsibility for filing the 1099-S. This is a significant help because, without this language, I would have to collect the seller’s Tax ID number (which is something many people may be hesitant to provide), complete the 1099-S myself and send a copy to BOTH the IRS and the Seller.

Technically speaking, the process isn’t all that difficult… but it’s even easier for the seller to complete it on their own – because they have all the information and don’t have to send anything to me – they would simply keep a copy for themselves and submit a copy to the IRS.

In transactions where I am the seller, I don’t include the above-mentioned clause in my contract at all, because it’s not difficult for me to file the 1099-S on my own behalf, especially since I already have all of the necessary information (including my own SSN or TIN) and I only need to provide this document one time to the IRS.

It’s also worth noting that I don’t necessarily include this “designation clause” in ALL of my purchase agreements. In many cases (depending on the size of the transaction, location of the property and the parties involved), the closing may end up running through a title agency or closing attorney – and in those cases, THEY (the closing agents) are responsible for filing the 1099-S, so it’s not always appropriate to put this task on every seller across-the-board.

You’ll want to understand which transactions you’re planning to close in-house and only include it when applicable.

If you’re still reading this, give yourself a pat on the back. This is pretty dense stuff, I know.

How to Complete a 1099-S

To complete the filing process, you will need to order blank copies of IRS Form 1099-S and IRS Form 1096. These forms need to be printed with a very specific type of paper and ink, and while it’s possible to reproduce these documents from home, it’s a lot easier to just order them from the IRS.

The forms are free and the IRS will send them by mail, usually arriving within about a week. It takes less than a minute to order. Here’s the link.

Note: If you are filing more than 250 of these forms, you are required to file electronically (but you’ll probably want to engage the services of a CPA well before you get to that point).

The Filing Process: When Buying

For each transaction where I am the buyer, there are a few different ways I can handle the filing of the 1099-S.

Option 1:

Ask the seller to complete IRS Form W-9 as part of their closing package. When this form is completed, signed, and dated, it will provide all the information needed (including their TIN / SSN) to complete the 1099-S and 1096 and file it appropriately.

This video explains how the W-9 works…

Note: If I’m the Buyer/Closer and I’m filing the 1099-S for the transaction, I would list myself as the “FILER” and the seller would be listed as the “TRANSFEROR” on both the 1099-S and 1096.

Option 2:

If I’ve included the above-mentioned “designation clause” in my purchase agreement, I essentially don’t have any further responsibility, because the seller has agreed that they will file these forms on their own behalf (this is something you’ll want to get verified by your own paid tax professional).

Option 3:

If I didn’t get a W-9 completed by the seller and/or if I failed to include the “designation clause” in my purchase agreement (or even if I did, but wanted to make the process easier for the seller), I could put together a letter of instruction and send it to the seller along with all the forms they’ll need to complete and submit to the IRS. In addition to the forms, I could also provide a pre-addressed envelope for the sellers to send their forms to the IRS.

Here’s an example of what it might look like:


1099s Example1

Note: In this example above, the property is a vacant lot without a physical address (which is why I listed the legal description). If it had been a common single-family home, I could have just entered the physical street address of the property and been all set.

1096 Example1

IRS Envelope

Note: If you’re not sure which address to include on the pre-addressed envelope, check the instructions on IRS Form 1096. This is what it said on the 2016 version of this form:

Screen Shot 2016-05-31 at 2.16.43 PM

Screen Shot 2016-05-31 at 2.16.59 PM

The Filing Process: When Selling

For each transaction where I am the seller, the filing process is pretty straightforward, because I have all the information I need to complete and submit these forms myself.

I would complete a 1099-S for the transaction by filling out ALL the information on the form (including my own Tax Identification Number, because I’m operating as an LLC) as both the filer and the transferor.

I would also complete one 1096 transmittal form with my information, including my TIN, as the filer. For both of these forms, the IRS and I are the only recipients, so I would simply send the 1099-S (Copy A) and the 1096 form to the IRS.

Here’s an example of what those forms might look like:

1099s Example2

1096 Example2

It’s also worth noting that if you sell multiple properties for which a 1099-S filing is required, you will need to fill out a separate 1099-S form for each sold property but you only need to complete one 1096 transmittal form.

Just add up the total amounts from box 2 of each of the 1099-S forms and enter it into box 5 of the single 1096 form, and enter the total number of forms for which the 1096 covers in box 3 of form 1096.

In other words, if you sold three properties to one buyer, your 1099-S form might look like this…

1099s Multiple

And your 1096 might look like this…

1096 Multiple

Note: See the totals in boxes 3 and 5 of form 1096? That’s what I’m talking about. 🙂

What If You Fail to File Form 1099-S?

What if you fail to file a 1099-S for one of your self-closed deals. Will something bad happen to you??

If you fail to file any type of 1099 form, the IRS can technically start issuing penalties starting at $250 per failure to those who don’t follow through with this requirement (that is, if they ever find out about it).

The thing to remember is… if you’re using the same closing rationale I do – there’s a fairly small window for the transactions where you’ll actually have to worry about this form in the first place.

Keep in mind:

  • A 1099-S is NOT required if the transaction is for less than $600 (and it’s not uncommon to find acquisition opportunities in the price range).
  • A 1099-S is NOT required if the seller certifies that the sale price is for $250K or less, and the sale is for their principal residence.
  • A 1099-S is NOT required if the seller is a corporation or a government unit (this includes most foreclosures and properties sold at county tax auctions).
  • If a property is being sold for $5,000 or more, it’s fairly easy to justify the use of a title company to close the transaction (and when you use a professional closing agent, they will handle this entire process for you).

So in my mind… I’m primarily concerned with deals that fall between $600 – $4,999, are safely considered “investment properties” and are being done with private individuals (…and not to mention, when I include the above-mentioned “designation clause” in my purchase agreement, I only need to take action on behalf of myself when I’m the seller).

Where to Report the 1099-S on Form 1040

Possible reporting options include, but may not be limited to:

Sale of:

  • Investment Use Property, Schedule D
  • Primary Residence, Schedule D and Form 8949
  • Business or Rental Property, Schedule D and Form 4797
  • Like-Kind Exchanges, Form 8824, Like-Kind Exchanges, with cash, or “boot”, received

For Form 1040 filers, the 1099-S related income, along with any other amounts required on these forms (for other purposes) will flow through Form 1040 based on the instructions for these forms and for Form 1040 found in the instructions publication for the respective forms.

IRS forms and the instructions for the forms can be found here.

Do You Have to Pay Taxes on a 1099-S?


Form 1099 is used to report non-employment income to the IRS. There are up to 20 different types of 1099 forms. 1099-S one of those types, and it’s used for reporting capital gains on real estate transactions.

Businesses (such as title companies) and other persons involved in real estate transactions where no title company is involved, must issue a form 199-S to anyone who receives at least $600 during the year.

If the business or other party involved in the real estate transaction submits a 1099-S form to the IRS, as they are required to do by law and a taxpayer does not report it, the IRS will likely send a bill for taxes owed on the income.

Taxpayers do not have to include 1099s with their tax returns submitted to the IRS, but the IRS uses computerized matching algorithms to match 1099s received from businesses or other parties involved in the real estate transaction to check to see if taxpayers include the income on their returns. So, it is a good idea to include the income and keep the 1099 forms with tax return records for audit protection purposes.

Further Reading: How to a 1099-S and 1099-S Affect My Taxes?

Do You Always Get a 1099-S When You Sell A House?

You may not always receive a 1099-S form.

When selling your home, you may have signed a form certifying you will not have a taxable gain on the sale. If you completed a 1099-S Exemption Certification Form and you met all six criteria for not having to report the sale on your tax return, the title company or closing attorney may not send IRS Form 1099-S, which reports the sale to the IRS and to you.  (See the section on Exemption Certification).

In the unlikely event that the sale was for less than $600, you probably would not receive a 1099-S. Or, if the transaction was closed without a title company or closing attorney and you agreed to be responsible for reporting of the sale (see the section on Who Issues 1099’s), you would not receive a 1099-S.

Further Reading: 12 Tax Tips When You Sell Your Home

Further Reading: Is it unusual not to receive a 1099-S Form for the sale of your home?

The 1099-S Certification Exemption Form

The 1099-s Certification Exemption Form applies to principal residences only.

The IRS Instructions for Form 1099-S, on page 1 and under the section entitled “Exceptions”, outlines transactions that are not 1099-S reportable. One of those transactions – the sale of a principal residence under certain conditions – is not reportable if certain criteria are met.

1099S Exception

The IRS requires written assurance (certification) the criteria have been met. The IRS Instructions for Form 1099-S can be found here.

An example of an IRS acceptable certification form can be found in the appendix to IRS Revenue Procedure 2007-12 here and is duplicated below.

1099S Certification Exemption Form 1

1099S Certification Exemption Form 2

Additionally, Old Republic Title has a pdf version of such a form available here.

Generally, the IRS requires certification of these six items:

  1. Owned and used as the principal residence for 2+ years of the 5-year period ending on the date of the sale or exchange of the residence.
  2. Had no sale or exchange of another principal residence during the 2-year period ending on the date of the sale or exchange of the residence.
  3. No portion of the residence was used for business or rental purposes.
  4. The sale or exchange is of the entire residence and for $250,000 or less; or if married, for $500,000 or less, and the gain is $250,000 or less.
  5. During the 5-year period ending on the date of the sale or exchange of the residence, it was not acquired in a 1031 exchange.
  6. If the basis in the residence is determined by the basis of another person who acquired it in a 1031 exchange, that exchange must have occurred more than 5 years prior to the sale or exchanged.

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About the author

Karl James has been a part-time land investor since 2013 with experience in rural acreage, in-fill lots, self-closings, seller financing, and deal funding. He is a CPA with math, accounting and MBA degrees along with 30+ years’ experience in the energy industry. In addition to helping others in the land business, Karl enjoys volunteering with his church and in his community.

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  1. Chris Kato says:

    Thanks for this Seth, great article as always. I was planning on talking to my tax attorney about this very issue. Now that I have an idea about the process, I wont look like to total Idiot when I talk to her!

    1. Seth Williams says:

      Awesome! Glad it gave you a good primer on the issue Chris. 🙂

  2. Steve says:


    Just came across this, the part where you state “what happens if you don’t file” I am interested in knowing the following. If one does not file it, how does the irs even know the transaction took place? Please bear in mind I am not arguing any tax points, just how would they even know? Is there anything specific that makes one liable to file this? Not on the amount, but on just exactly who this applies to?


    1. Seth Williams says:

      Hi Steve – great question. Honestly, I think there are probably MANY instances where people have missed this form. In the vast majority of those cases, my assumption is that nothing happens (of course, I have no proof of this, it’s just my hunch – because this is such an obscure thing that doesn’t hit most people’s radar). It probably also has something to do with the size of the deal. Again, I have no proof of this, but rationally speaking – the IRS probably isn’t going to make a huge deal out of a $500 deal, but they’d be more likely to care about a $500,000 deal.

      The IRS instructions for the 1099-S are fairly confusing and difficult to follow (and I think there’s at least a little bit of room for interpretation in there)… but if you’re facilitating the closing yourself and if the deal fits inside the box described in the instructions (which I outlined above), you should probably plan on filing it yourself, or at least designating which specific party will handle it.

      If you’ve missed this form in the past, it’s probably not worth having a panic attack over it… but just be aware of the requirement and be sure to handle it on all of your future deals going forward when applicable (or simply have a title company or attorney handle your closings for you, because they’ll handle it as part of their process).

      1. Jolene says:

        If the transaction is a contract for deed with annual payments and I am reporting for the first year payment is the gross proceeds the principal payment made and the date of closing would be the date of the payment? What about the interest is the seller required to send a 1098?

        1. Seth Williams says:

          Hi Jolene – generally, yes – it’s the seller’s job (or if someone is servicing the contract for deed for you, or if you have an accountant involved with preparing your tax return… they would usually take care of it) to file a 1098 for the interest paid to them each year (assuming the amount exceeds $600).

          1. Jolene says:

            The seller is indicating I need to file the 1099 S which I am willing to do I am just not sure how to fill out the form for the 2016 payment. The attorney who closed the transaction completed the 1099 S at the time of closing in 2015 so when I complete the 1099 S for the 2016 payment do I put the principal amount paid in 2016 and the closing date would be the date of the payment. It is an annual principal and interest payment. In reading about a 1098 it doesn’t appear the seller has to file since it is not his business.

  3. William Halford says:

    My dad passed away November 9, 2015. His house (primary residence) sold at auction on December 3, 2015, and the final paperwork was signed December 23, 2015. I have a brother and sister, and we split the money 3 ways, with the checks being distributed at the lawyer office on December 23. My share was just under $43k.

    I received a Form 1099-S. Will I have to file this with my taxes, and will I have to pay taxes on the amount?

    1. Seth Williams says:

      Hi William – the answer can vary based on your situation… but generally speaking, yes. The whole point of the 1099-S is for the seller (or closer) to notify the IRS, so they’re aware that the sale took place. It’s probably worth a question to your tax preparer to get more specifics on how much, and what it means for your specific situation.

      1. William Halford says:

        Yes generally speaking yes, as in will I have to file, or generally speaking yes, as in I’ll have to pay taxes on the money?

  4. Suzanne says:

    What amount do you put in Box 2 if it is a land contract sale? It is a land contract between the parents and the daughter. Down payment as $1. Value of the property $50,000 paid over 15 years. Does this need to be filed out?

    1. Seth Williams says:

      Hi Suzanne, that’s a great question. I’m not a tax accountant, so you’ll want to verify this with a licensed professional, BUT… if it were me, I would think you’d want to put the full purchase price in that box. It would then be up to the seller and their tax preparer to determine when and how much of those proceeds they need to pay taxes for over the term of the loan (and I think this can vary based on the property type).

      1. suzanne fraser says:

        Thank you very much!!

        1. Seth Williams says:

          Glad to help Suzanne!

  5. Willie A Wright says:

    Hi Seth,
    Great article! I understand the form a little better now. I received a 1099-s yesterday because I sold me rental house in August. The gross proceeds says $98000, but I didn’t make $98000! I now I’m concerned about paying taxes on money I didn’t receive. Am I missing something?


    1. Seth Williams says:

      Hi Willie – that’s strange… do you have any idea where that number came from? You might want to call the closing agent who handled the transaction and ask them why they used this number. If it’s a mistake, perhaps they can send in a correction.

      1. Karl says:

        Many times, the closing agent that creates and provides the 1099-S has no idea what the Seller’s cost basis is in the property. You will, pay taxes on only the gain (the proceeds shown on the 1099-S minus your basis). You will have to provide the basis to the IRS when you complete your tax return. If you received a settlement statement at the time you closed your purchase, that’s the best place to start for your basis – basically what is your investment in the property.

  6. Crystal says:

    My father passed away last year. We have sold two pieces of property and the proceeds of the sale went to the bank to pay on an old loan and release the liens. I have received a 1099-S but I did not receive any cash from the sale. Do I need to report the income and pay taxes?

    1. Seth Williams says:

      Hi Crystal – that sounds like a good question for your accountant or tax preparer. They should be able to give you the right answers based on the specifics of what happened in your situation. Best of luck!

  7. Drew says:

    Hey Seth,

    Great Article!

    I’m in the land investing business, and am curious how to approach this when selling on terms. When it’s a Cash deal, it’s pretty straight forward in filling out the 1099-S. However, when I sell on Terms, will I need to submit the form when the “Land Contract” or “Contract for Deed” is initiated or should I want until the contract is paid off and the deed is recorded in the buyers name? My concern with doing it upfront is with the situation where the buyer defaults and you have to foreclose on the property. In this case you would need to submit another 1099-S when you sell it again. Would this just be duplicating efforts or would you actually need to submit another 1099-S when you sell again?

    Thanks for all the great content you provide Seth!

    1. Seth Williams says:

      Great question Drew! I actually had to think about this one for a minute. I think technically, if you were using a third party closing agent (like a title company or attorney), most of them would complete this at the time of sale – even for a seller financed property.

      HOWEVER, to be absolutely sure… you’d probably want to get in contact with a local CPA and ask them to verify this. They could tell you for sure what your responsibility is if you’re closing the deal yourself. I understand what you mean… if the buyer defaults, it would definitely be duplicating efforts – but even so, at the time of closing, it’s impossible to know if/when a buyer will default, so you kind of have to proceed with the assumption that everything will be paid as agreed.

  8. Brian c says:

    Great article, 1 question.
    I have a 1099 s. What schedule do I use in filling out the 1040.

  9. Ken Eyler says:

    Doing taxes for my in-laws. They purchased a winter home in Florida back in the late 80’s for $30,000, upgraded to a $40,000 home (replaced a single wide with a double-wide) in the 1990’s. Sold the property in 2016 for $100,000. They received a 1099-S showing the $100,000. Property was not their principle residence. I assume they have to pay taxes on net receipts. How do I end up providing info on initial $40,000 cost so they end up only paying taxes on $60,000. Can they deduct commission paid to real estate broker of $10,000 to reduce net gain to $50,000. thanks

    1. Seth Williams says:

      Hi Ken, that’s a good question. In many cases, the county should have record of all historical transactions on each property (i.e. – the deed), which in many cases – will list the sale amount. The local municipality (city/township assessor) may also have some record of what the transfer value was (because this is usually how they determine what the assessed/taxable value of each property is).

      However, outside of that (assuming your in-laws don’t have any records from the transaction in the 90’s), I’m not sure how else you would prove that… sounds like a good question for an accountant.

  10. SUSANA BLACK says:

    Great article. Thanks.

    1. Seth Williams says:

      No problem Susana!

  11. Gracie Hernandez says:

    I bought property (lot, no home) back in 1992. I sold it last yr for 10 k. Since i did not live on the property does this mean i would be required to file the 1099 s?

    1. Seth Williams says:

      Depending on who closed the transaction for you, someone should be doing it. If you handled it through a title company or attorney, they’ll most likely be doing it for you. However, if you closed it yourself, then it would be up to you to get this done (unless someone else was designated along the way).

      1. gracie says:

        Thank you Seth. Turns out they did do the 1099 s, so I do need to put this on my income tax , correct?

  12. Teri says:

    So we just learned that the attorney-in-fact made a mistake when he checked that transaction was exempt (husband and wife sold for $535,000)! Closing was August 2016 (it’s now March 2017). We missed it! What do we do? Will settlement agent be penalized for “late filing”?

    1. Seth Williams says:

      Have you thought about asking the attorney what to do (or maybe asking a different attorney or CPA for their opinion)?

      1. Teri says:

        Thank you for your quick response! I did ask a CPA (not an Accountant) but he didn’t know enough about it and said he would look into it! I just don’t have any patience and thought I would scout around for the answer myself! I will also try another attorney as you suggest. We are all feeling pretty stupid at this point! At the very least, we are sending a 1099-S to the seller for his income taxes.

  13. Talia says:

    Hey Seth, I’m a freelancer and this is so helpful! One question – do I have to fill out 1099s every quarter? I’ve never heard of a 1096 before either and had no idea I’d need one.


    1. Seth Williams says:

      Hey Talia! Thanks – glad to hear it! The 1099s is specifically for real estate transactions, so if you’re a freelancer, you may be looking for 1099-MISC instead. They typically have to be done once a year for anyone who has paid you more than $600 in that fiscal year, and it’s something your customers (i.e. – the people who pay you) would send to you.

      If you have any further questions about this, be sure to ask your accountant – they can probably help a lot more than I can. 🙂

      Good luck!

  14. Mario S says:

    My mother owns 75% of a property in Los Angeles, CA which she sold around summer of 2016, the proceeds of the sale 75 % was divided into 7 parts ( 6 children and the parents share) which was paid by escrow in 7 equal checks.

    My question is do I need to declare it as an income (my 1/7th part ) or as capital gains or something or not at all, I am very confused since my name is not included in the title but my 1/7th share of the 75% of the sales proceeds was issued by escrow on my name.

    Do I need a certain kind of paperwork like 1099 or something since I did not get anything or the check is sufficient to file my taxes since it has the amount of my share.

    I live in a different state which is Nevada and the property was in Los Angeles, CA . My mother passed away last December 2016

    1. Seth Williams says:

      Hi Mario, thanks for asking – the situation sounds a bit more complex than I’d be comfortable answering (because I’d hate to give you the wrong information). It’s probably worth your while to ask a local financial professional and get their thoughts on it.

      Sorry I can’t be of more help here!

  15. Karen says:

    Hi Seth, I’m confused. When my mother died, her house (which was in a Family Trust) was sold and the proceeds of the Trust were divided among three people (including myself). There is a “Substitute Form 1099-S” written out (“Transferor’s Name”) to the Family Trust for the full amount (around $500,000).
    Does one of us need to report this 1099-S on our tax return? Do we need to pay taxes on it (federal or state)? I really have no idea how to handle this! Thanks for any help you may be able to provide!

    1. Seth Williams says:

      Hi Karen – I can understand why you’re confused – I’m confused too! I’m sure there’s a “right way” to handle this but honestly, I’m not sure what that is. I’ve never dealt with this specific situation before, so you’d probably want to have a quick chat with your tax preparer and/or CPA on how to best handle it.

      Sorry I can’t be of more help here! Good luck!

  16. Gina Z says:

    Hi Seth, I am in Escrow currently selling my primary residence of 17 years. I bought it for $189,000 back in 2000. I’ve put tons of money for improvements over the years. I am in escrow at a sales price of $415,000. Do I need a 1099-S? Will I have to pay taxes on the proceeds? I was hoping that I fell into the IRS Section 121 and didn’t have to report proceeds and pay taxes on them because I’ve lived in the house over 2 years.

    1. Seth Williams says:

      Hi Gina – this sounds like a better question for a tax specialist than me. However, my understanding is that if the 1099-s is required in your situation, your escrow company and/or closing agent will be the responsible party for handling it. Furthermore, my understanding is that with the sale of your primary residence, there are some tax shelters that typically apply to you (as I read in this article).

      Again though, I’m not a tax guy, and even if I was – I don’t know the specifics of your situation, so this is something you’ll definitely want to take up with your tax preparer when it comes time to file your next tax return.

  17. Larry L says:

    I got a1099s for an easement that an electric company put a line across my property. This line decreased the value of my property. How do I report it. I have owned property for over 25 years and it has appreciated over the years.

    1. Seth Williams says:

      Hi Larry – how do you know it decreased the value of your property?

      1. Larry l says:

        If I wante d to sell to build a house the prime location for a home on the property would be where the easement runs. Build in front of easement puts one too close to road for a nice looking homestead. In back of easement would limit the area for a home as property is a triangle shape. .

    2. kat w says:

      Larry L, I have the same issue, I am under the impression that you subtract the money from the easement from the value of your property. What did you do??

  18. Tom says:

    My brother and I sold our mom’s house after she passed away. We were all held title on the property. We received a 1099S from the closing agent. I thought there were exemptions for selling property due to death.

    Any insight?

  19. Frank Keating says:

    Hi Seth,

    Great article, I received a 1099s form for a home my wife and I sold. It is for $570,000 and the home was our principle residence. Because the home sale was over $500,000 are we responsible for taxes on the $570,000 amount or only on the $70,000 because we should have a $500,000 exemption? I’m not sure how we should handle this.

    Thank you,

  20. Trish Quintenz says:

    If the property is part of a trust and the proceeds of the sale are to be equally distributed to two people, who is required to file the 1099S?

  21. Paul Cesario says:

    hi Seth
    i am a seller of lot and a title co closed what happen if they don’t send the IRS form 1099S
    and I file sch D stating my capital gain

    1. Seth Williams says:

      Depending on the sale price, it may not have been necessary – but if you’re concerned about it, you could always call the title company and ask them if they should be sending you one.

  22. JFINFL says:

    Thanks for sharing your insight on the 1099-S. This was a very clear and easy to understand article. I wish more SME (subject-matter-experts) would publish these types of articles. One that would be particularly helpful would be reporting requirements for the 1099-S involving the “exchange” real property (such as a timeshare or the like) that is not your primary home. Especially, when only the Gross Proceeds are the only value reported on the form. A significant number of readers would benefit from such knowledge sharing.

    1. Thanks for reading! And thanks for the kind words. I know what you mean… especially with some of the wildly confusing IRS forms out there, it’s surprising more people haven’t come up with an easy-to-follow set of instructions for filling them out. Thanks for sharing the suggestion on the exchange type of transaction as well. I’m probably not experienced enough to put together any instructions on that kind of scenario, but if enough people need it, perhaps I’ll put the time into figuring it out.

  23. Mike says:

    Hi Seth, thank you for this great article. I have what I hope is a simple question. I bought a piece of property in 2007 for 30K. I sold it in 2017 for only 20K. I have a 1099-S filed by closing attorney for the gross proceeds of 20K for the 2017 sale. But since I bought the property in 2007 for 30K and only sold it for 20K in 2017, I lost 10K. I have all the paperwork from the closing of the 2007 purchase and the 2017 sale. So my question : Since I sold the property for less than what I paid for it, there is no “gain” and I do not have to pay tax on the 20K from the 2017 sale, correct?

    1. Hi Mike, it sounds like you definitely won’t have to pay any taxes on the gains (because there weren’t any). As for whether or not the form is still necessary… you’d have to take a closer look at the instructions with the 1099-S (which are very long and boring to read, I know). Chances are, the answer is buried somewhere in there.

  24. JoAnn says:

    Columbia Gas Transmission has a pipeline running through our property on an easement. They replaced the 30 inch pipeline and tore our property up for months. They paid us and then sent a 1099s. Box 2 for gross proceeds says 6,350.00 and box 1 says closing date of 4/27/2017. We did not sell any property to them. Looks like just paying us for inconvenience and property damage. How do I handle this.

  25. Albert says:

    Hi Seth-
    Who would I have received the 1099S from? I never received one as I made a sale in 2017. If I didn’t receive a 1099s, does it mean it was never report to the IRS? I hope to hear from you. Thanks

    1. It’s generally the seller’s or the closer’s responsibility to get this form sent out to you and the IRS – but even if they don’t, it’s still your responsibility to make sure you’re paying any applicable the taxes on the sale. The 1099-S is there as sort of a safeguard, so that the IRS is aware of what you’re supposed to be doing, in case you fail to do it.

  26. Lyna L says:

    if I sold my investment property and used the proceeds to purchase primary property within the same year, do I have to report this proceeds as capital gain? It seems the exchange is not as much discussed.

  27. Steph says:

    AS a buyer do I have to list my social security number? I am concerned given that this form is going to be given to the seller.

  28. Marilyn winkler says:

    Does this ruling apply to transactions made before the ruling?

    1. What ruling are you referring to?

  29. William T Kaser says:

    What if you have a 1099S form as the result of a home that was sold from an estate and split among four heirs. A title company handled the closing ant the amount in box 2 is $16,925.00. Does this have to be reported?

    1. That sounds pretty complex – I’m not sure I can give you the right answer on that. I would ask your accountant or CPA what they think. Good luck!

  30. BL Maryland says:

    Part of my property, (backyard or my principal residence), the State of North Carolina took this property for Eminent Domain. I did NOT have the option of how to spend the money that was considered ‘just compensation’. Instead, because I still had a mortgage on my residence, the State of North Carolina paid off my mortgage in full. It just happened to be the same amount as considered “just compensation.” At the closing, by an attorney, I signed a form that stated I knew I would be receiving a 1099-S for 2018. This income must be reported to the IRS and state. I did NOT want to sell my property, but did not have a choice due to Eminent Domain and property was needed for a highway. I was told this is not capital gains, therefore I owed taxes on the amount of money paid to the mortgage company. (Which paid the mortgage loan in-full). I am a senior citizen, income below the poverty level, and the legal guardian of a 5 year old grandchild. I cannot find ANY CPA or tax attorney that can give me an answer on what I should expect to owe the government for taxes. Please help. I could not afford a CPA, and since I live from social security paycheck-to-paycheck each month, I do not have money to pay taxes on this money! I was told that if I could not pay the taxes on the money received from the state, they could put a lien on my home. This just doesn’t make sense. I had no option because of the eminent domain law. The state of North Carolina said they must pay off my mortgage before taking the property for the highway. They did not take my residence, but now it is practically worthless. Please, someone tell me what this is all about? 1099-S. I no longer have a mortgage to pay, but I did not have any other option. The tax people at AARP who normally prepare my tax returns do not know anything about these convoluted laws. I do not understand, although I have read thru the IRS explanation. I will not be leaving my home, or investing in any other property. Help.

  31. Fran G. says:

    I received form: 1099-S (Proceeds from Real Estate Transaction) I wanted to know what to do with this when doing my 2018 taxes. We sold some property that was used as an investment/personal use. How do I figure out my total expenses over the years in regard to total Gross Proceeds?

  32. Kevin says:

    So my mother sold her house last year and my brother and I gave Our part of the proceeds to her at the time of closing. We both just received 1099s forms filed by the closing firm that show we received each a quarter of the proceeds. Any suggestions on how we rectify this.

    1. Hmmm good question… I could guess at the answer, but it would be purely a guess. I would talk to an accountant about the right way to handle this.

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