Form 1099-S is used to report the sale or exchange of present or future interests in real estate. It is generally filed by the person responsible for closing the transaction, but depending on the circumstances it might also be filed by the mortgage lender or a broker for one side or other in the transaction.
When is Form 1099-S issued?
Transactions reported on Form 1099-S include the following:
- land, whether improved or unimproved;
- a permanent building;
- a condominium, including its fixtures and land;
- stock in a section 216 cooperative housing corporation;
- a non-contingent interest in standing timber, e.g., royalties under a pay-as-cut contract.
When is Form 1099-S not issued?
A taxpayer might not receive Form 1099-S in these scenarios that involve real estate or a building:
- Sale of a main home for $250,000 or less if the seller is unmarried, or $500,000 or less if married, and the seller is excluding the entire gain from gross income (with some exceptions).
- A transaction that's not a sale or exchange, e.g., a gift, a bequest, or financing or refinancing that doesn't involve the exchange of real estate.
- A transaction to satisfy debt that is secured by the property, including foreclosure and abandonment.
- A transaction in which the total amount transferred is less than $600.
- A transaction in which the transferor is a government, a corporation, or an "exempt volume transferor" (as defined in the Form 1099-S instructions).
- An interest in natural resources other than standing timber.
- A burial plot or vault.
- A building that's not affixed to the ground, e.g., a mobile home.
What is reported on Form 1099-S?
Form 1099-S reports several important bits of information - the date of sale and the gross proceeds of the transaction, whether paid in cash or in a digital asset - and it has been sent to the IRS, so a taxpayer who has received one must report it on their tax return. Where it is reported depends on the kind of transaction:
- If the property was the taxpayer's main home, complete the Sale of Main Home Worksheet to determine the capital gain as well as any gain that can be excluded and depreciation recapture. The sale will flow to Form 8949.
- If it's a like-kind exchange, report on Form 8824. From there you'll select to report the sale on Form 6252 if it's also an installment sale, on Form 4797 if it's a sale of business property, or Schedule D.
- If it's an installment sale, report on Form 6252. Depending on whether the property was used in business or not, the sale flow to either Form 4797 or to Schedule D.
- If it's a sale of business property, not part of a like-kind exchange and not being paid in installments, report on Form 4797.
Note: This article provides general information on IRS Form 1099-S. It is not intended as tax advice.
Additional Information:
IRS: Instructions for Form 1099-S, Proceeds from Real Estate Transactions