Form 1099-S: Proceeds From Real Estate Transactions – 2024 Guide

What Form 1099-S Is For

Form 1099-S is an information return used to report the sale or exchange of real estate to both the IRS and the property seller. Think of it as a receipt that documents you sold real property—whether that's your home, investment property, vacant land, a condo, or even stock in a cooperative housing corporation. The form captures key details about the transaction: the closing date, gross proceeds (sale price), and property address.

Unlike forms you file yourself, Form 1099-S is typically prepared by the "person responsible for closing"—usually your settlement agent, title company, escrow company, or real estate attorney. They send one copy to the IRS, one copy to you (the seller), and keep one for their records. The purpose is straightforward: the IRS wants to know about real estate transactions so they can ensure any taxable gains are properly reported on your personal tax return IRS.gov.

The form applies to most real estate sales, including homes, commercial buildings, land (improved or unimproved), condos, co-op apartments, and certain timber interests. However, not every home sale triggers a 1099-S. If you sold your primary residence and meet specific criteria—sale price of $250,000 or less for single filers ($500,000 for married couples filing jointly) and you can exclude the entire gain under the home sale exclusion rules—you might not receive this form at all IRS.gov.

When You’d Use Form 1099-S

Normal Timeline

The closing agent must file Form 1099-S with the IRS by February 28, 2025 for paper filings or March 31, 2025 for electronic filings (for transactions occurring during the 2024 tax year). You, as the seller, should receive your copy by February 18, 2025 IRS.gov.

Amended/Corrected Forms

Mistakes happen—wrong sale price, incorrect taxpayer identification number (TIN), or inaccurate property address. If the closing agent discovers an error after filing, they must issue a corrected Form 1099-S. There's no specific deadline for corrections, but the IRS expects them to be filed as soon as possible after discovering the error. The corrected form will have a box marked "CORRECTED" at the top.

Late Filings

If you're a closing agent who missed the deadline, file immediately. Late filing penalties range from $60 to $330 per form depending on how late the filing is, with higher penalties for intentional disregard (up to $660 per form).

Key Rules or Details for 2024

Electronic Filing Threshold

Starting with the 2024 tax year, if you're a closing agent filing 10 or more information returns (including all 1099 forms combined), you must file electronically—the threshold dropped from 250. This affects title companies and settlement agents handling multiple transactions IRS.gov.

Home Sale Exclusion

The most important exception for homeowners is the Section 121 exclusion. You won't receive a Form 1099-S if your sale qualifies for this exception AND you provide written certification to the closing agent. To qualify, you must meet all these conditions:

• The property was your principal residence
• You owned and lived in the home for at least 2 of the 5 years before the sale
• Sale price is $250,000 or less (single) or $500,000 or less (married filing jointly)
• You can exclude the entire gain under Section 121
• You haven't used this exclusion in the past 2 years
• There was no "nonqualified use" period after December 31, 2008

If these conditions are met and you provide the certification at or before closing, no Form 1099-S is required IRS.gov.

Exempt Transactions

You also won't receive a Form 1099-S for:

• Sales by corporations, government units, or "exempt volume transferors" (those selling 25+ properties annually)
• Foreclosures, transfers in lieu of foreclosure, or debt satisfaction
• Gifts or inheritances
• Transactions under $600 (de minimis)
• Mobile homes not affixed to a foundation (unless sold with land)

Multiple Sellers

If you sold property with co-owners (other than a spouse), the closing agent must issue separate Forms 1099-S to each owner. They should request an allocation of proceeds among sellers; if no allocation is provided, each form may show the total gross proceeds IRS.gov.

Step-by-Step (High Level)

For Closing Agents

Determine Responsibility

At closing, identify who must file—typically the settlement agent listed on the Closing Disclosure, or if none exists, the transferee's attorney, transferor's attorney, disbursing title company, mortgage lender, broker, or transferee (in that order).

Collect Information

Request the seller's complete taxpayer identification number (TIN)—usually their Social Security Number—no later than the closing date. Use Form W-9 or a written statement. Keep this documentation for 4 years.

Calculate Gross Proceeds

Report the total sales price including cash, notes receivable, assumed mortgages, and liabilities paid off at settlement. Don't subtract commissions or other seller expenses.

Complete the Form

Enter the closing date (Box 1), gross proceeds (Box 2), property address (Box 3), and check boxes if applicable for property/services received (Box 4), foreign seller (Box 5), or buyer's portion of real estate taxes (Box 6).

File and Furnish

File with the IRS by the deadline (Feb 28 paper/March 31 electronic) and provide a copy to the seller by February 18.

For Property Sellers (Taxpayers)

Receive Your Copy

You should get Form 1099-S from the closing agent by mid-February.

Review for Accuracy

Verify the gross proceeds, property address, and your personal information. Report errors to the closing agent immediately.

Determine Tax Impact

Calculate whether you have a taxable gain or loss. For primary residences, apply the home sale exclusion if eligible (up to $250,000 single/$500,000 married).

Report on Tax Return

If you received Form 1099-S, you generally must report the sale on your Form 1040 using Form 8949 (Sales and Other Dispositions of Capital Assets) and Schedule D (Capital Gains and Losses)—even if you owe no tax due to the exclusion.

Keep Records

Retain your closing documents, settlement statement, and Form 1099-S for at least 3 years (or longer if claiming certain exclusions) IRS.gov.

Common Mistakes and How to Avoid Them

Mistake #1: Failing to Request Seller's TIN at Closing

The closing agent must request the seller's taxpayer identification number no later than the closing date. Failing to do so can result in backup withholding requirements and penalties. Solution: Make TIN collection part of your standard closing checklist using Form W-9.

Mistake #2: Incorrectly Calculating Gross Proceeds

Gross proceeds include the full sale price plus assumed mortgages and paid-off loans—but shouldn't include personal property sold separately (like appliances) or seller-paid expenses. Solution: Use the contract sales price as your starting point, add any liabilities the buyer assumed or paid off, but exclude separately stated personal property IRS.gov.

Mistake #3: Not Filing When Required Due to Misunderstanding Exemptions

Many closing agents incorrectly assume no filing is needed when the sale price is under $250,000, but the exemption only applies if the seller provides written certification meeting all requirements. Solution: Always request the certification in writing if you want to rely on the exemption—verbal assurances don't count.

Mistake #4: Issuing One Form for Multiple Sellers

Each transferor (except married couples in certain situations) needs their own Form 1099-S with their individual TIN. Solution: Request an allocation of proceeds among sellers at or before closing, and issue separate forms accordingly. If no allocation is received, report the full unallocated amount on each seller's form IRS.gov.

Mistake #5: Seller Not Reporting the Sale on Their Tax Return

Some sellers mistakenly think that if they didn't receive a 1099-S or if they qualify for the home sale exclusion, they don't need to report the sale. Solution: If you received Form 1099-S, you must report the sale on your tax return (Form 8949 and Schedule D) even if no tax is owed. The IRS has a copy of the form and expects to see it reported.

Mistake #6: Wrong Property Address or Missing Legal Description

An incomplete or incorrect address makes it difficult for the IRS to match the form to the seller's return. Solution: Include the full street address, city, state, and ZIP code. For properties where the address isn't sufficient (rural land, for example), add the legal description (section, lot, and block) IRS.gov.

What Happens After You File

For Closing Agents

Once you submit Form 1099-S to the IRS and provide copies to sellers, you're required to keep your records (including the TIN request and any certification documents) for 4 years after the filing date. The IRS may contact you if there are discrepancies or if they need additional information during an audit of the seller. You cannot charge sellers a separate fee for complying with 1099-S requirements, though you can factor the cost into your general closing fees IRS.gov.

For Property Sellers

After receiving your Form 1099-S, you'll need to determine your actual tax liability. First, calculate your "basis" in the property (what you originally paid plus improvements minus depreciation). Subtract this basis from the gross proceeds to determine your gain or loss.

For primary residences, if you meet the ownership and use tests (2 out of 5 years), you can exclude up to $250,000 of gain ($500,000 married filing jointly) from taxable income. You'll report the sale on Form 8949 and Schedule D, but the excluded portion won't be taxed.

For investment or rental properties, you'll pay capital gains tax on your profit. Long-term gains (property held over 1 year) are taxed at preferential rates (0%, 15%, or 20% depending on your income). You may also owe depreciation recapture tax at 25% on any depreciation you claimed IRS.gov.

The IRS uses Form 1099-S to match against your tax return. If you received the form but didn't report the sale, expect a computer-generated notice (CP2000) proposing additional tax, interest, and penalties. If you did report it correctly, the matching process confirms compliance and the matter is closed.

FAQs

Q1: I sold my house for $300,000 but my gain was only $50,000 after deductions. Why does my 1099-S show $300,000?

Form 1099-S reports gross proceeds (the sale price), not your taxable gain. The form doesn't account for your original purchase price, improvements, or selling expenses. You calculate the actual taxable gain on your personal tax return by subtracting your adjusted basis from the gross proceeds. The 1099-S is just the starting point.

Q2: I qualify for the $250,000/$500,000 home sale exclusion. Do I still need to report the sale on my tax return?

It depends. If you received Form 1099-S, you must report the sale on Form 8949 and Schedule D even if you owe no tax. However, if you provided proper certification to your closing agent and they didn't issue a 1099-S, and your entire gain is excludable, you generally don't need to report it. When in doubt, report it—there's no penalty for reporting a non-taxable transaction IRS.gov.

Q3: I'm a closing agent. The sellers are a married couple. Do I need to issue two Forms 1099-S?

No. If the sellers are married and held the property as joint tenants, tenants by the entirety, community property, or tenants in common, you can issue just one Form 1099-S showing either spouse's name and TIN. However, if the spouses request an allocation of proceeds between them, you must issue separate forms according to that allocation IRS.gov.

Q4: What if the closing agent made a mistake on my 1099-S? Can I just attach an explanation to my tax return?

No. Contact the closing agent immediately and request a corrected Form 1099-S. They must file a corrected version with the IRS with the "CORRECTED" box checked. Don't file your tax return with incorrect information just because the form is wrong—wait for the correction or you may face IRS notices later.

Q5: I sold investment property in a 1031 like-kind exchange. Do I still get a Form 1099-S?

Yes. Even though you're deferring the gain through a 1031 exchange, the sale is still reportable. Your closing agent should issue Form 1099-S, though the gross proceeds might be reported as $0 (zero) with Box 4 checked to indicate property was received. You'll report the exchange on Form 8824 (Like-Kind Exchanges) with your tax return IRS.gov.

Q6: What's the difference between Form 1099-S and the Closing Disclosure I received at settlement?

The Closing Disclosure (formerly HUD-1) is a detailed settlement statement showing all money that changed hands at closing—including loan amounts, prorations, credits, and fees paid by both buyer and seller. Form 1099-S is a tax reporting form focused only on the seller's gross proceeds for IRS purposes. The closing agent uses information from the Closing Disclosure to complete Form 1099-S IRS.gov.

Q7: I inherited property and sold it. Will I receive Form 1099-S, and how is the gain calculated?

Yes, you'll receive Form 1099-S showing the sale price. For inherited property, your tax basis is generally the fair market value on the date of the decedent's death (called "stepped-up basis"), not what they originally paid. This often results in little or no taxable gain if you sell relatively soon after inheriting. Report the sale on Schedule D as a capital gain, holding period is automatically long-term IRS.gov.

Additional Resources

• IRS Form 1099-S Instructions
• IRS About Form 1099-S
• IRS Publication 523 - Selling Your Home
• IRS Form 8949 Instructions
• IRS Due Date Correction Notice

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