Form 1099-S: Proceeds From Real Estate Transactions (2019)
What Form 1099-S Is For
Form 1099-S is an information return that reports the sale or exchange of real estate to both you (the seller) and the Internal Revenue Service. Think of it as a receipt that documents your real estate transaction for tax purposes. The form reports the gross proceeds—basically the sales price—from the transaction, along with other essential details like the closing date and property address.
The form is typically prepared by the person responsible for closing the transaction, which is usually your settlement agent, title company, attorney, or in some cases, your real estate broker or mortgage lender. You'll receive Copy B for your records, while the IRS receives Copy A. The form covers virtually all types of real estate transactions, including sales of residential homes, commercial buildings, condominiums, cooperative housing units, land (improved or unimproved), and even certain timber transactions.
It's important to understand that receiving a Form 1099-S doesn't automatically mean you owe taxes. The form simply reports the transaction—whether you have taxable gain depends on factors like how long you owned the property, whether it was your primary residence, and whether you qualify for any exclusions under tax law.
Source: IRS.gov
When You’d Use Form 1099-S (Late/Amended Filings)
Form 1099-S has specific deadlines that differ depending on whether you're the closing agent filing the form or the seller receiving it. For transactions closed in 2019, closing agents had to furnish Copy B to sellers by February 15, 2020, and file Copy A with the IRS by February 28, 2020 (for paper filing) or March 31, 2020 (for electronic filing).
Filing Late or Corrected Forms
If you're a closing agent who needs to file a late or corrected Form 1099-S, there's no hard deadline to submit corrections, but the IRS strongly prefers corrections within three years of the original filing date. This aligns with the statute of limitations for amending tax returns. To file a corrected form, simply use a regular copy of Form 1099-S and mark the “CORRECTED” box at the top. You must send the corrected form to the IRS, the seller, and any applicable state agencies.
If You’re a Seller
If you're a seller who received an incorrect Form 1099-S or didn't receive one when you should have, contact your closing agent immediately. If you've already filed your tax return based on incorrect information, you may need to file Form 1040-X (Amended U.S. Individual Income Tax Return) to correct your personal return. There's no penalty for filing a correction as long as it's done in good faith to fix genuine errors.
Source: IRS Instructions for Form 1099-S (2019)
Key Rules for 2019
Several important rules governed Form 1099-S reporting in 2019. First, the form was required for any real estate sale or exchange involving reportable real estate, which includes improved or unimproved land, permanent structures, condominiums, cooperative housing stock, and non-contingent interests in standing timber.
Exceptions to Filing
No Form 1099-S was required if:
- Principal residence exemption applied: If the seller certified in writing that the property was their principal residence and the full gain was excludable under Section 121 (up to $250,000 for single filers or $500,000 for married couples filing jointly), no form was needed.
- De minimis transactions: Sales under $600 didn't require reporting.
- Corporate or governmental sellers: These entities were exempt.
- Exempt volume transferors: Professional real estate dealers who sold at least 25 separate properties to 25 different buyers during the year (or either of the two previous years).
- Certain property types: Mobile homes not affixed to a foundation, burial plots, and interests in natural resources (except standing timber).
For multiple sellers, closing agents had to file a separate Form 1099-S for each seller and request an allocation of gross proceeds among them. Spouses who jointly owned property as joint tenants, tenants by the entirety, or community property could be treated as a single transferor.
Source: IRS Instructions for Form 1099-S (2019)
Step-by-Step Filing (High Level)
For Closing Agents
Step 1: Determine if Reporting Is Required
Check whether any exceptions apply. Request a written certification from the seller if they claim the principal residence exclusion. The certification must be signed under penalties of perjury and received by January 31 of the year following the sale.
Step 2: Identify the Responsible Filer
If a HUD-1 settlement statement is used, the settlement agent listed on that form is typically responsible. If no HUD-1 is used, responsibility falls to whoever prepares the closing statement. If no closing statement exists, responsibility follows this order:
- Transferee's attorney
- Transferor's attorney
- Disbursing title/escrow company
- Mortgage lender
- Transferor's broker
- Transferee's broker
- Transferee
Step 3: Request the Seller’s TIN
At or before closing, request the seller's Taxpayer Identification Number (TIN) using Form W-9 for U.S. persons or Form W-8 for foreign persons. Keep the documentation for four years.
Step 4: Complete the Form
Enter the closing date (Box 1), gross proceeds (Box 2), property address or legal description (Box 3), and check applicable boxes (Boxes 4–6) for property/services, foreign status, or real estate taxes.
Step 5: File and Furnish
Send Copy A to the IRS by the deadline and Copy B to the seller by February 15 of the following year.
Source: IRS Form 1099-S (2019)
For Sellers
When you receive Form 1099-S, verify the information is correct. Report the sale on your tax return using Schedule D and Form 8949, or Form 4797 if the property was used for business. Even if you qualify for the home sale exclusion, you may still need to report the transaction if you received a Form 1099-S.
Common Mistakes and How to Avoid Them
Mistake #1: Not Obtaining Seller Certifications
Problem: Many closing agents fail to request written certifications for the principal residence exclusion.
Solution: Develop a checklist and retain certifications for four years.
Mistake #2: Incorrect Gross Proceeds Calculation
Problem: Some agents subtract seller expenses from gross proceeds.
Solution: Report total contract sales price without deductions.
Mistake #3: Missing or Incorrect TINs
Problem: Failure to collect the seller’s correct TIN can trigger penalties.
Solution: Request Form W-9 early and verify TIN accuracy.
Mistake #4: Filing Single Forms for Multiple Sellers
Problem: One form is filed for multiple sellers.
Solution: File separate 1099-S forms for each seller and allocate proceeds.
Mistake #5: Reporting Exempt Transactions
Problem: Filing for corporate or governmental sellers or small transactions.
Solution: Review exceptions list before preparing forms.
Mistake #6: Missing Deadlines
Problem: Late filing or furnishing leads to penalties.
Solution: Mark deadlines:
- February 15 (sellers)
- February 28 (paper IRS)
- March 31 (electronic IRS)
Mistake #7: Not Checking the Foreign Person Box
Problem: Failure to mark Box 5 for foreign sellers.
Solution: Always verify seller residency and request proper forms.
Source: IRS Instructions for Form 1099-S (2019)
What Happens After You File
Once the closing agent files Form 1099-S with the IRS, the information enters the IRS's computerized matching system to verify that sellers properly report transactions.
For Sellers
Receiving Form 1099-S means you must address the transaction on your tax return, even if you don’t owe tax. If you qualify for a home sale exclusion under Section 121, reporting the form can help avoid IRS inquiries.
If you owe tax, calculate gain or loss using your adjusted basis and selling price. Report any taxable gain on Schedule D.
For Closing Agents
Keep all copies and documentation for at least four years. The IRS may send correction notices or penalty assessments if errors are found.
If the IRS detects a discrepancy—such as a seller not reporting a sale—it may issue a CP2000 notice (Underreporter Inquiry) requiring clarification or correction.
Source: IRS.gov
FAQs (Frequently Asked Questions)
Q1: Do I Always Get a 1099-S When I Sell My House?
No. If you sold your principal residence for $250,000 or less ($500,000 or less for married couples) and you certified this to your closing agent, you shouldn't receive Form 1099-S. Other exceptions also apply.
Q2: Does Receiving a 1099-S Mean I Owe Taxes?
Not necessarily. The form reports gross proceeds only. Whether you owe taxes depends on your adjusted basis and whether exclusions apply.
Q3: What If I Didn’t Receive a 1099-S but Sold Real Estate?
You must still report the sale using your closing documents. Contact your closing agent to confirm whether an exemption applied.
Q4: How Do I Report Form 1099-S on My Tax Return?
Use Schedule D and Form 8949 for personal property, Form 4797 for business property, or Form 8824 for like-kind exchanges.
Q5: Can I Be Penalized If My Closing Agent Doesn’t File Form 1099-S?
No, sellers aren’t penalized for their agent’s failure to file, but they must still report the sale.
Q6: What Should I Do If I Receive a Corrected 1099-S After Filing?
If the correction affects your taxable gain, file Form 1040-X within three years to amend your return.
Q7: What If I Sold Property Jointly With Others?
Each seller gets a separate Form 1099-S for their share unless they are spouses filing jointly.
Source: IRS Instructions for Form 1099-S (2019)
Additional Resources
This summary provides general information based on 2019 IRS guidelines and should not be considered tax advice. Consult a qualified tax professional for guidance specific to your situation.
