How to File Form 1099-S for Real Estate Transactions

Form 1099-S, titled “Proceeds From Real Estate Transactions,” is an Internal Revenue Service (IRS) form used to report the sale or exchange of real estate. This form plays a role in ensuring that real estate transactions are accurately reported for tax purposes. Its primary function is to inform the IRS about the gross proceeds from property sales, allowing the agency to verify income reported by sellers. Understanding the requirements for Form 1099-S is an important step for those involved in real estate transactions to meet their federal tax obligations.

Identifying the Filer

The responsibility for filing Form 1099-S typically rests with the person responsible for closing the real estate transaction. This often includes title companies, escrow companies, or mortgage lenders involved in finalizing the sale. In situations where no single party is explicitly responsible for closing, the filing obligation may fall to the mortgage lender, the transferor’s broker, the transferee’s broker, or even the transferee, in that order of priority.

A filing requirement is generally triggered by the sale or exchange of specific types of real estate interests. This includes improved or unimproved land, permanent structures such as residential, commercial, or industrial buildings, condominium units, stock in cooperative housing corporations, and non-contingent interests in standing timber. These transactions are reportable even if they are not currently taxable, such as a sale of a main home where the gain might be excludable.

There are several common exceptions to the Form 1099-S filing requirement. One significant exception applies to certain sales of principal residences where the gross proceeds are $250,000 or less for single filers, or $500,000 or less for married couples filing jointly, provided the seller certifies they meet the requirements for excluding the entire gain from gross income. Other non-reportable transactions include transfers to governmental units, certain foreclosures, gifts, or bequests. Transactions where the total consideration is less than $600 are also generally not reportable.

Information Required to Complete Form 1099-S

Accurately completing Form 1099-S requires gathering specific information about the transaction and the parties involved. This includes details concerning the transferor, such as their full name, current address, and Taxpayer Identification Number (TIN), typically their Social Security Number or Employer Identification Number. For the property itself, the form requires the address or a legal description if the address is insufficient for identification.

Transaction-specific details are also necessary, including the date of closing. The gross proceeds from the sale, representing the total cash or cash-equivalent amount received by or on behalf of the seller, must be reported. This amount includes any notes payable to the seller or mortgages paid off at settlement, but generally excludes separately stated payments for personal property or seller-paid expenses like commissions. Additionally, if the buyer paid any portion of real estate tax in advance, that amount may need to be reported in Box 6. The form also includes a box to indicate if the transferor is a foreign person.

This information can be obtained from various official documents related to the real estate transaction. Settlement statements, such as a HUD-1 or Closing Disclosure, are primary sources for dates, gross proceeds, and property tax details. Property deeds provide legal descriptions and ownership information. Personal records of the transferor can also supply necessary identification details.

Methods for Submitting Form 1099-S

Once Form 1099-S has been accurately completed, filers have options for submission to the IRS. Electronic filing is available through the IRS Filing Information Returns Electronically (FIRE) system. To use the FIRE system, filers typically need to register and obtain a Transmitter Control Code (TCC). The e-file threshold was lowered to 10 returns for filings on or after January 1, 2024, meaning most filers are now required to submit electronically if they have 10 or more information returns of any type.

Alternatively, filers can mail paper forms to the IRS. When submitting paper forms, Form 1099-S must be accompanied by Form 1096, Annual Summary and Transmittal of U.S. Information Returns. Form 1096 acts as a cover sheet, summarizing the information returns being sent. It requires the filer’s name, address, and TIN, which must match the information on Form 1099-S. Filers also specify the total number of forms being transmitted and the total amounts reported. It is important to use an official, scannable version of Form 1096, which can be ordered from the IRS, as printed PDF versions may not be accepted.

Regardless of the submission method to the IRS, filers must also furnish copies of Form 1099-S to the transferor by a specified deadline. For the 2024 tax year, the deadline for furnishing copies to transferors is February 18, 2025. The deadline for filing Form 1099-S with the IRS is February 28 if filing by paper, or March 31 if e-filing for the 2024 tax year.

After Form 1099-S Submission

After Form 1099-S has been successfully submitted to the IRS and copies provided to the transferor, retain records related to the filing. This includes keeping copies of the filed Form 1099-S, proof of mailing if submitted by paper, or confirmation of e-filing if submitted electronically. Maintain these records for at least four years.

Should an error be discovered on a previously filed Form 1099-S, a corrected form must be submitted. The process for correcting errors depends on how the original form was filed; if the original was e-filed, the correction must also be e-filed. To file a correction, a new Form 1099-S is prepared, and the “CORRECTED” box at the top of the form is marked with an “X”. The correct information is then entered, and the form is re-submitted to the IRS and furnished to the transferor.