Form 1099-S: Proceeds From Real Estate Transactions (2014)

If you've taken money out of your retirement account, received a pension payment, or cashed in an annuity, you'll likely receive Form 1099-R. This tax form reports distributions from various retirement plans and is crucial for filing your taxes correctly. Here's everything you need to know about Form 1099-R for 2025, explained in plain language.

What Form 1099-S Is For

Form 1099-S is an official IRS document used to report the sale or exchange of real estate to both the Internal Revenue Service and the property seller (called the "transferor"). Think of it as a receipt that documents your real estate transaction for tax purposes. The form reports the gross proceeds—essentially the sales price—from selling or exchanging property like homes, land, commercial buildings, condominiums, cooperative housing corporation stock, or even standing timber with non-contingent interests. IRS.gov

The key purpose is to create a paper trail for the IRS. When you sell real estate, the government wants to know about it because you may owe capital gains tax on any profit. The person responsible for "closing" your transaction—typically a title company, escrow agent, or settlement attorney—must file this form and send you a copy. It's not something you fill out yourself as the seller; rather, you receive it from the closing agent, similar to how you receive a W-2 from your employer. IRS.gov

When You’d Use Form 1099-S (Filing Late or Amended Returns)

As a property seller, you don't file Form 1099-S—you receive it. The closing agent was required to provide you with Copy B by February 17, 2015 for transactions completed in 2014. They had to file Copy A with the IRS by March 2, 2015 (or March 31, 2015 if filing electronically). IRS.gov

If you're the seller and discover errors on your 1099-S, contact the filer (the person or company listed at the top of the form) immediately to request a corrected form. They should file a corrected Form 1099-S with the IRS and provide you with a corrected copy marked "CORRECTED" at the top.

If you're reading this because you're a closing agent who missed the deadline or discovered an error, you should file a late or corrected Form 1099-S as soon as possible. Check the "CORRECTED" box at the top of the form when filing an amendment. Late filing may result in penalties, but filing late is better than not filing at all. The IRS imposes penalties ranging from $50 to $270 per form for late filing, depending on how late you are, with potential maximum penalties of over $1 million for intentional disregard.

Key Rules for 2014

Who Must File

Generally, the person responsible for closing the transaction must file Form 1099-S. This is typically whoever is listed as the "settlement agent" on the HUD-1 Settlement Statement. If no HUD-1 is used, it's whoever prepares the closing statement. If there's no closing statement, responsibility falls in this order: the transferee's attorney, the transferor's attorney, the disbursing title/escrow company, the mortgage lender, the transferor's broker, the transferee's broker, or finally the buyer themselves. IRS.gov

What Must Be Reported

The form reports the gross proceeds from selling or exchanging improved or unimproved land, permanent structures (residential, commercial, or industrial buildings), condominiums, cooperative housing stock, and non-contingent interests in standing timber. Gross proceeds include all cash received, notes payable to the seller, assumed mortgages, and liabilities taken over by the buyer. IRS.gov

Major Exceptions

Not every real estate sale requires Form 1099-S. The most important exception for homeowners in 2014 is the primary residence exclusion. If you sold your main home for $250,000 or less (or $500,000 or less for married couples), and you provided written certification that it was your principal residence and the full gain qualifies for the Section 121 exclusion, no Form 1099-S is required. Other exceptions include transactions involving corporations, governmental units, sales under $600, foreclosures, gifts, refinancings, and properties owned by "exempt volume transferors" (typically real estate dealers). IRS.gov

Multiple Transferors

When multiple people sell the same property, a separate Form 1099-S must be filed for each seller. The filer must request an allocation of proceeds among the sellers. If married spouses held the property jointly, only one form is required showing either spouse's name. IRS.gov

Step-by-Step (High Level)

Step 1: The Transaction Occurs

You sell or exchange your real estate property. The closing date is when title transfers or when the economic burdens and benefits of ownership shift to the buyer, whichever comes first.

Step 2: Identification and Information Gathering

At or before closing, the person responsible for filing must request your taxpayer identification number (TIN)—your Social Security Number for individuals. They can use Form W-9 or provide a written statement. This request can happen in person, by mail, or electronically. IRS.gov

Step 3: Determination of Reportability

The closing agent determines whether the transaction requires Form 1099-S based on the exceptions. If you're selling your primary residence, they may ask you to sign a certification stating the property qualifies for the gain exclusion.

Step 4: Calculation of Gross Proceeds

The filer calculates gross proceeds, which includes all cash, notes payable to you, notes the buyer assumed, and any mortgages paid off at settlement. This information typically comes from the HUD-1 Settlement Statement. The gross proceeds are NOT reduced by your selling expenses like commissions, legal fees, or advertising costs. IRS.gov

Step 5: Form Preparation and Filing

The responsible party completes Form 1099-S with your information, the closing date, gross proceeds, property address, and any additional details (like whether you received property or services as part of the deal, or the buyer's portion of prepaid real estate taxes).

Step 6: Distribution to You

You receive Copy B of Form 1099-S by February 17, 2015. The filer also sends Copy A to the IRS and keeps Copy C for their records. IRS.gov

Common Mistakes and How to Avoid Them

Mistake #1: Confusing Form 1099-S with Your Tax Return

Many sellers mistakenly think receiving Form 1099-S means they automatically owe taxes. Not true! The form is just an information document. Whether you owe taxes depends on your specific situation—your cost basis, how long you owned the property, whether it was your primary residence, and applicable exclusions. You might owe nothing if your gain qualifies for the $250,000/$500,000 home sale exclusion. Always report the sale on your tax return (Schedule D or Form 4797) even if you owe no tax. IRS.gov

Mistake #2: Assuming Box 2 (Gross Proceeds) Equals Your Taxable Gain

Box 2 shows the total sales price, NOT your taxable profit. Your gain is calculated by subtracting your adjusted cost basis (original purchase price plus improvements minus depreciation) from the sales price, then subtracting eligible selling expenses. Many sellers panic when they see a large number in Box 2, forgetting they can deduct what they originally paid for the property.

Mistake #3: Ignoring Box 5 (Buyer's Part of Real Estate Tax)

If Box 5 has an amount, this represents real estate taxes you paid in advance that actually cover the period after the sale (so they benefit the buyer). If you already deducted these taxes in a prior year, you must report this amount as income on your tax return. If you haven't yet deducted them, you can subtract Box 5 from your total payment to determine your deductible portion. IRS.gov

Mistake #4: Not Reporting Like-Kind Exchanges Properly

If Box 4 is checked, indicating you received property or services (not just cash) as part of the deal, you must file Form 8824 if it was a like-kind exchange. The value of non-cash property isn't included in Box 2, so you need to account for it separately. Don't overlook this requirement, as like-kind exchanges have special tax treatment. IRS.gov

Mistake #5: Losing or Discarding the Form

Keep Form 1099-S with your tax records for at least three years (though seven years is safer). You'll need it to prove the sale date, sale price, and other details if the IRS ever questions your tax return. It's also valuable if you later discover errors in your return and need to file an amended return.

Mistake #6: Not Verifying Information Accuracy

When you receive Form 1099-S, immediately verify all information is correct: your name, SSN (last four digits shown), property address, closing date, and gross proceeds amount. Compare it to your HUD-1 Settlement Statement. If anything is wrong, contact the filer immediately for a correction before you file your tax return.

What Happens After You File

For Your Tax Return

You must report the real estate transaction on your 2014 federal income tax return, due April 15, 2015 (or October 15, 2015 if you filed for an extension). If the property was your main home, use Schedule D (Form 1040) and follow the instructions for home sales. If it wasn't your main home, you may need Form 4797 (business property), Form 6252 (installment sales), and/or Schedule D depending on the type of property and how you're reporting the gain or loss. IRS.gov

IRS Matching

The IRS uses computerized systems to match the Form 1099-S information with your tax return. If you don't report the sale, or if the numbers don't match what's on Form 1099-S, you may receive an IRS notice (typically a CP2000, "Proposed Changes to Your Tax Return") asking for clarification or proposing additional tax. This matching process usually occurs 12-18 months after you file your return.

Potential for Audit

While receiving Form 1099-S doesn't automatically trigger an audit, failing to report it properly increases audit risk. The IRS knows about the transaction and expects to see it on your return. Report it accurately even if you have no taxable gain.

Federal Mortgage Subsidy Recapture

If you received a subsidized mortgage through qualified mortgage bonds or mortgage credit certificates, and you sell your home at a gain within nine years, you may have to "recapture" (pay back) part of the subsidy. This applies if your income in the year of sale exceeds certain thresholds. Use Form 8828 to calculate any recapture amount, which increases your tax liability. IRS.gov

State Tax Implications

Many states also require reporting of real estate sales. While Form 1099-S goes to the federal IRS, check your state's requirements for additional forms or reporting.

FAQs

Q1: I sold my home for $200,000 and it was my primary residence for five years. Why didn't I receive Form 1099-S?

A: You likely signed a certification at closing stating the property was your main home and your gain qualifies for exclusion under Section 121. For 2014, if your home sold for $250,000 or less ($500,000 for married couples) and you provided this written assurance to the closing agent, they were not required to file Form 1099-S. This is the most common reason people don't receive the form. You must still report the sale on your tax return even without Form 1099-S. IRS.gov

Q2: Do I need to attach Form 1099-S to my tax return when I file?

A: No, you don't attach it. Form 1099-S is for your records and information. The IRS already received their copy directly from the filer. You simply use the information from Form 1099-S to complete the appropriate sections of your tax return (typically Schedule D and Form 8949 for capital gains). Keep the form with your tax records in case of questions later.

Q3: The gross proceeds in Box 2 seem too high. It includes the mortgage the buyer assumed. Is this correct?

A: Yes, this is correct. Gross proceeds include all consideration you received, including cash, notes payable to you, AND any debt the buyer assumed or took the property subject to. From the IRS perspective, you're being "paid" when someone takes over your mortgage obligation, even though no cash changes hands directly to you. This is why Box 2 often looks larger than the cash you actually pocketed. When calculating your gain, you'll account for this properly by using your adjusted basis. IRS.gov

Q4: I sold land I inherited from my parents. How does Form 1099-S affect my taxes?

A: Form 1099-S simply reports the sale; it doesn't determine your tax liability. For inherited property, your cost basis is "stepped up" to the fair market value on the date of your parent's death (or alternate valuation date). This is typically much more favorable than using what your parents originally paid. Calculate your gain by subtracting this stepped-up basis from the sales price. The holding period for inherited property is automatically considered long-term regardless of how long you actually held it. Report the sale on Schedule D.

Q5: Box 4 is checked on my Form 1099-S. What does this mean for me?

A: Box 4 being checked means you received property or services (not just cash and notes) as part of your sale proceeds. For example, if you did a property swap or received a car plus cash for your land, Box 4 would be checked. The value of that non-cash property is NOT included in Box 2. If this was a like-kind exchange (now limited to real property), you must file Form 8824 to report it and potentially defer recognizing gain. If it wasn't a like-kind exchange, you need to determine the fair market value of what you received and report the total gain accordingly. IRS.gov

Q6: I'm a foreign person who sold U.S. real estate. What's different for me?

A: Sales involving foreign transferors are still reportable on Form 1099-S, so you'll receive the form just like a U.S. person. However, as a foreign seller, the buyer was generally required to withhold 10% of the gross sales price under FIRPTA (Foreign Investment in Real Property Tax Act) rules and remit it to the IRS using Form 8288. This withholding acts as a prepayment of your potential tax liability. You must file a U.S. tax return to report the sale and claim credit for the amount withheld, potentially receiving a refund if the withholding exceeded your actual tax liability. See IRS Publication 515 for complete guidance. IRS.gov

Q7: We're a married couple who sold our jointly-owned home. Should we receive two Forms 1099-S?

A: No. If you and your spouse held the property as joint tenants, tenants by the entirety, tenants in common, or community property, the filer treats you as a single transferor and issues only one Form 1099-S showing either spouse's name and Social Security Number. When you file your joint tax return, you'll report the sale once. If for some reason you received separate forms or need to file separately, you'd need to allocate the proceeds between you based on your ownership interests. IRS.gov

Remember: Form 1099-S is an information-reporting document, not a bill. Receiving it doesn't automatically mean you owe taxes—your actual tax liability depends on many factors including your basis, exclusions, and holding period. When in doubt, consult a tax professional to ensure you're reporting your real estate sale correctly and taking advantage of all available tax benefits.

For the most current information and forms, always visit IRS.gov/form1099s.

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