IRS Form 1099-S: 11 Things (2022) You Should Know

If you’ve had a real estate sale this past year, don’t leave it until the last minute to send in your IRS Form 1099-S.

This form is important because it ensures that you are reporting all capital gains as required by federal law.

You’ll need to have this done in advance of the deadline, so don’t delay!

In this blog, we’ll discuss the top things you should know about IRS Form 1099-S.

Let’s get started.

1. What is IRS Form 1099-S?

IRS Form 1099-S is a tax document used to ensure that the full amount of capital gains received for a real estate sale are accurately reported to the IRS.

Typically, when real estate is sold, the seller is subject to a capital gains tax.

In order to calculate how much tax you are required to pay, the IRS must know how much you made on the sale.

Thus, the IRS Form 1099-S must be filed as part of the closing process in order to report the non-employment income you made on the sale to the IRS.

This is an official IRS (Internal Revenue Service) tax form that requires a lot of personal information, including your full name and address.

While you can have this form outsourced, you’ll want to make sure you trust whoever fills it out for you.

2. Who must file IRS Form 1099-S?

There are a number of factors that impact who must file a 1099-S Form.

These include:

bulletThe sale price

bulletThe closing agent

bulletThe seller

bulletThe type of property being bought and sold

Here are some scenarios under which you are not responsible for filing the 1099-S yourself as a seller (note: please be sure to verify any of the below information with your attorney, closing agent and/or accountant):

bulletIf you close a transaction with a title company or attorney (as most people do), then they will usually collect the necessary information and file Form 1099-S on your behalf.

They will also send you a copy, which you can use when you file your income tax return.

bulletIf the seller certifies that the sale price is for $250K or less (and the sale is for their principal residence), then the transaction is not reportable.

You do not need to worry about filing a 1099-S Form.

If you’re married, this price is increased to $500,000.

Please see the screenshot below from the IRS’s Instructions for Form 1099-S (2021).

bulletIf the seller is a corporation (as defined under Regulations section 1.6045-4(d)(2))) or government unit, then the transaction is not reportable and you do not need to worry about filing a 1099-S Form.

Please note that an LLC would have to be treated as a corporation for tax purposes to be considered under this exemption.

bulletIf the seller is an exempt volume transferor, or someone who sold at least 25 properties in the last year, then the transaction is not reportable and you do not need to worry about filing a 1099-S Form.

Please see the screenshot below from the IRS’s Instructions for Form 1099-S (2021).

bulletIf the total money, services, and property received are less than $600, then the transaction is not reportable and you do not need to worry about filing a 1099-S Form.

Please see the screenshot below from the IRS’s Instructions for Form 1099-S (2021).

These are the most common reasons why you do not need to file an IRS Form 1099-S.

You can read up about other exceptions on the IRS website.

With that said, if the transaction does not fall within one of these categories and you’re facilitating the closing yourself, you will likely need to file Form 1099-S.

The IRS designates that “the person responsible for closing the transaction” is required to file Form 1099-S.

Please see the screenshot below from the IRS’s Instructions for Form 1099-S (2021).

This is why title companies and attorneys are able to do it on your behalf.

If you do not want to file it yourself, you are able to designate a person required to file Form 1099-S in a written agreement.

The IRS states, “You can enter into a written agreement at or before closing to designate who must file Form 1099-S for the transaction.

Please see the screenshot below from the IRS’s Instructions for Form 1099-S (2021).

3. When should you file?

If you are required to file the 1099-S yourself, you can choose to submit it via mail or e-file.

If you’re filing by mail, you should do so by February 28, 2022.

You can find the address where you must send the form on the IRS’s General Instructions for Certain Information Returns.

If you’re e-filing, then you should do so by March 31, 2022.

You can file online at the IRS’s Online Filing System.

Please note that you must request the authority to file online before November 1st using Form 4419, Application for Filing Information Returns Electronically (FIRE).

You will also need software that will allow you to submit the document in the proper format.

4. What else do I need to file?

Even if you do not have to file the 1099-S form yourself, you will still need to report any capital gains on your income tax return (Form 1040).

The sale of the following assets must be reported as follows (please note that this is not an exhaustive list):

bulletInvestment Use Property: Form 1040 Schedule D

bulletPrimary Residence: Form 1040 Schedule D and Form 8949

bulletBusiness or Rental Property: Form 1040 Schedule D and Form 4797

bulletLike-Kind Exchanges: Form 8824

5. Why is an 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.

Capital gains are taxed on the profit you realize from the growth in the value of an investment.

Where real estate is concerned, 1099-S Forms come into play when individuals buy and sell properties.

For example, consider someone buying a property for $100,000 and selling it for $150,000.

This gives them $50,000 of capital gains income.

While the individual is supposed to report this as taxable income at the end of each year, not everyone does.

Requiring the closing agent to file a 1099-S acts as a safeguard and keeps the IRS informed of what’s going on. 

6. How do you complete the IRS Form 1099-S?

To complete a 1099-S Form, you’ll need to provide the following information.

bulletFiler’s name, address, telephone number

bulletFiler’s TIN (tax identification number) or SSN (social security number)

bulletTransferor’s (seller’s) TIN/SSN (the closing agent may request that you fill out form w-9 to get this information)

bulletTransferor’s (seller’s) name and address

bulletAccount number

bulletDate of closing

bulletGross proceeds

bulletAddress or legal description of the transferred property

bulletIndication if transferor (seller) received property or services as part of the consideration

bulletIndication if transferor (seller) is a foreign person, partnership, estate, or trust

bulletBuyer’s part of real estate tax

7. What are the most common uses for an IRS Form 1099-S?

The purpose of Form 1099-S is to ensure that sellers are reporting the full amount of their capital gains on each year’s income tax return.

Thus, the copy of the 1099-S form you receive from your title company will help you as you file your taxes.

Here are the most common uses for the 1099-S.

bulletPersonal use:

This is for individuals who received a 1099-S because of the sale of their primary residence.

The sale of your home will be reported on Form 8949 and Schedule D.

Do not report the sale of your primary residence on your tax return unless your gains exceeded your exclusion amount.

If you received a 1099-S for the sale of a timeshare or vacation home, then the sale is a personal capital asset and is reportable on Form 8949 and Schedule D.

A gain on this type of sale is reportable regardless of the sale amount.

Because it is a personal use property, you also cannot deduct a loss if you incurred a loss on the sale.

The same rules apply if the property was inherited and considered a personal capital asset.

bulletInvestment use:

If you received your 1099-S Form for an investment property (or inherited property that is considered investment property), then the sale is reportable on Schedule D.

bulletBusiness or rental use:

If you received your 1099-S Form for the sale of a business or rental property, this is reportable on Schedule D and on Form 4797.

8. What happens if you fail to file?

Are you just now hearing about IRS Form 1099-S for the first time?

Do you have a sinking feeling in your stomach wondering if you should have been filling it out for the past few years?

What’s going to happen to you if you haven’t filled it out previously?

Is the IRS going to come knocking down your door?

Technically, there are penalties that the IRS can issue for failure to fill out any type of 1099 Form.

These start at $250 per failure if they find out about it.

However, there’s a fairly small chance that you’ll be the one specifically in charge of the 1099-S form.

Typically, the transactions you’ll need to look out for are those where no title company or attorney is involved.

So if this applies to you, then you’ll want to make sure you cross your t’s and dot your i’s to ensure you don’t get hit with penalties.

9. Do you have to pay taxes on the gains reported on the IRS Form 1099-S?

Yes, IRS Form 1099-S is used to report non-employment income to the IRS.

There are over 20 different types of 1099 forms, and 1099-S is just one of those types.

It’s specifically used for reporting capital gains on real estate transactions.

Businesses (like title companies) and any other parties involved in a real estate transaction (where no title company is involved) must issue an IRS Form 1099-S to anyone who receives at least $600 during the year.

They are required by law to do this.

The IRS uses the 1099-S sent by the closing agent to verify that the sale was included in the taxpayer’s return.

10. Do you always get an IRS Form 1099-S when you sell a house?

No, not always.

When you sell your home, you may have signed a form certifying that you will not have a taxable gain on the sale.

If you’ve completed a 1099-S Exemption Certification Form, and you met all six criteria for not having to report the sale on your tax return, then the title company or closing attorney may not send IRS Form 1099-S to you or the IRS.

There are also a couple of other instances where you wouldn’t receive a 1099-S form.

For example, if the sale was for less than $600 (unlikely), or if the transaction was closed without a title company or closing attorney and you agreed to be responsible for reporting the sale.

11. What is the 1099-S Certificate Exemption Form?

The 1099-S Certificate Exemption Form applies to principal residences and outlines transactions that are not 1099-S reportable.

Typically, the IRS requires certification of these six items.

bulletOwned 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.

bulletHad 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.

bulletNo portion of the residence was used for business or rental purposes.

bulletThe sale or exchange of the entire residence is for $250,000 or less.

If married, the sale or exchange of the entire residence is for $500,000 or less.

bulletDuring the 5-year period ending on the date of the sale or exchange of the residence, it was not acquired in a 1031 exchange.

bulletIf 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 exchange.

Final Thoughts

Are you feeling more prepared for tax season?

Real estate taxes – for both buyers and sellers – can seem complicated until you get the hang of it.

Don’t let IRS Form 1099-S scare you.

It’s just a document that reports to the IRS the profit you made from selling a house as a taxable gain.

However, it allows a significant exclusion or reduction if you meet certain requirements.

As you navigate this process, be sure to consult a real estate tax attorney or accountant if you need help getting everything in order.

Additional Resources

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Disclaimer: we are not lawyers, accountants or financial advisors and the information in this article is for informational purposes only. This article is based on our own research and experience and we do our best to keep it accurate and up-to-date, but it may contain errors. Please be sure to consult a legal or financial professional before making any investment decisions.

24 thoughts on “IRS Form 1099-S: 11 Things (2022) You Should Know”

  1. Escrow agent refuses to correct the number of transferors with allocation changes on the substitute form 1099s when she was informed of mistake after escrow closing which prejudices my tax return by concealing information.

    Reply
    • I’m sorry to hear that, Gene. Thank you for sharing.

      Reply
  2. Hello there…I just sold my primary residence and made 80k in profits, I lived in the place 13 months . Do I need to file 1099-s?
    I’m using the money to buy another house to live in.
    My house sold for more than 250k

    Reply
    • Hello Felipe, I believe you do, but you can always speak with your accountant. However, to be on the safe side, you may want to go ahead and file.

      Reply
  3. My wife and her three sisters took possession of their father’s house when he passed on November 3 of 2019. The house passed to them jointly via a “Warranty Deed Reserving Life Estate”. The house was sold 4 months later for a total net of $317,030 on March 3, 2021. It’s my understanding that the basis of the property is its value as of November 3, 2019 and that since it was sold within 6 months the IRS deems there not to have been reportable gain. Further, there will be no Form 1099-S to file. Is my understanding correct?

    Reply
    • Hello Woodie, since I am not an accountant or lawyer, I am hesitant to offer specific advice. I would recommend speaking with your accountant to confirm whether you need to file.

      Reply
  4. Isn’t the late 1990s $500,000 married couple exclusion too low to account for inflation now that it’s 25 years later? Do you know if the law will boost this anytime soon in fairness?

    Reply
    • Hello Rich, unfortunately, I am not aware of any plans to boost the exclusion.

      Reply
    • I’m so glad it was helpful!

      Reply
  5. My girlfriend sold her home that has been used for the last 6 years as a rental. She purchased it in 2010. We sold it in March of 2021 for 265,000. She received a 1099-S from her attorney which has in Block 2, Gross Proceeds of $205,000. I’m not sure why it’s 60,000 less than the actual sale price. She had a mortgage to pay off but it was substantially more than 60,000. I know she doesn’t meet the 2 out of 5 year rule etc. for the exemption on using her place as a rental. I’m using Turbo Tax Premier and it’s telling me to use the Gross Proceeds block from the 1099-S. This sale did not use a realty agent. She hired the lawyer to accomplish the sale. Most of the closing expenses actually went to the buyer. I know I’m obligated to use the 1099-S value, but I’m a bit nervous that it could be wrong. Of course that’s all the IRS will see. Any suggestions. Should I confirm with the lawyer all is well. Thanks.
    Ken

    Reply
    • Hello Ken, I would recommend confirming with your lawyer and/or accountant. Cheers!

      Reply
  6. Hello
    I received 1099-S from the city
    The empty lot city will use for public services
    I have to sale
    The 3 lots total 42000×3=126000
    How to file on income tax return?

    Reply
    • Hello Van Sam, I would recommend speaking with your accountant. Unfortunately, I am not a tax advisor and cannot give out specific filing advice.

      Reply
  7. Hi! My uncle died in 2020, leaving his estate to my 2 siblings and me. We sold the house in March 2021 (11 months later) and closed the estate in late 2021. The “substitute 1099S” form that came is in the name of the estate. Does the estate have to report capital gains (of about $3000+) or do we each report it on our individual returns?

    Reply
    • Hello S., I would recommend speaking with your accountant. I’m sorry I can’t be of more help!

      Reply
  8. Hello Great site: My sister and I are selling our rental home and will be receiving capital gains proceeds. I am so unclear on the 1099 S that the Title Agency will issue. Can we instruct how the 1099 will be issued, 80/20 of earnings, 80 for my sis and 20 for me. The capital gain when filing in 2022 will greatly affect our Obama Care health credits and we are afraid we would have to give them all back when filing in 2022.
    If we are two sellers, is the 1099 s form have both our ssn numbers?
    Even so, can we change distributions of funds once we file 2022 taxes or do we have to file as 1099 were issued.
    And can 1099 s be issued according to the how we decide our proceeds distribution. Sorry so confused about this 1099 S.

    Reply
    • Hello Tammy, the 1099s is a simply form that just lists the proceeds from a sale as well as the names of the sellers: https://www.irs.gov/pub/irs-pdf/f1099s.pdf
      When it comes time to file your income tax returns, I would recommend speaking with an account to make sure you are reporting any capital gains correctly.

      Reply
  9. The original purchase land by my mother several years back was for 175k. She later gifted this to me. I then sold it laster year for 125k. A 1099s was filed. Do i need to report this on my 1040? and if so how do i calculate the G/L. These clearly should be a loss.

    Reply
    • Hello Sean, I recommend speaking with your accountant as it depends on the specifics of the sale and whether the property is your primary residence.

      Reply
  10. I sold a rental home for 289,000. I received 20,000 down on the land contract from the buyers, what should the 1099-s show as the gross proceeds? Thanks gary

    Reply
    • Hello Gary, my understanding is that gross proceeds should show the sales price, but I would recommend speaking with your accountant.

      Reply
  11. I sold my home for more than $250K and after the mortgage and realtor was paid, I profited $138. I lived in the home for 5 years. Am I required a 1099-S since I didn’t profit over $250

    Reply
    • Hello Tina, I would recommend that you double-check with your accountant as I am not one myself and would hate to give you bad advice!

      Reply

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