Form 1099-S: Proceeds From Real Estate Transactions (2021)
What Form 1099-S Is For
Form 1099-S is an information return that reports money received from selling or exchanging real estate. Think of it as the IRS's way of tracking real estate transactions—similar to how a W-2 reports your wages or a 1099-NEC reports freelance income.
The form is typically prepared by the person responsible for closing your real estate transaction—usually the settlement agent, title company, or escrow officer listed on your Closing Disclosure. If you sold property in 2021, the closing agent may have filed this form to report the sale to both you and the IRS.
What Gets Reported on Form 1099-S
Almost any sale or exchange of real estate, including:
- Residential homes (single-family, condos, co-op apartments)
- Commercial and industrial buildings
- Raw land (improved or unimproved)
- Timeshares with at least 30 years remaining on the contract
- Standing timber sold for a lump-sum payment
Even if you don't owe taxes on the sale—perhaps because you qualify for the home-sale exclusion—the transaction may still be reportable on Form 1099-S. The form simply documents that a real estate transaction occurred and reports the gross proceeds (the total sales price before expenses).
When You’d Use Form 1099-S (Late or Amended Filing)
If You’re the Seller
You typically don't file Form 1099-S yourself—the closing agent does. However, you should receive Copy B of the form by February 15, 2022 (for 2021 sales). If you receive a 1099-S, you must report the sale on your tax return, even if you don't owe taxes on it.
If You Didn’t Receive a 1099-S
You may not have received one because your sale qualified for an exception (see Key Rules section below). However, you still need to report certain sales on your tax return if they exceed the home-sale exclusion amounts.
Corrected or Amended Forms
If the closing agent made an error on your 1099-S—such as reporting the wrong gross proceeds, incorrect property address, or wrong taxpayer identification number—they can file a corrected Form 1099-S. The IRS generally allows corrections within three years of the original filing date.
Common Reasons for Corrections
- Incorrect sales price or gross proceeds amount
- Wrong seller name or taxpayer ID number
- Inaccurate property address
- Errors in checkboxes (property/services received, foreign person designation)
If you notice an error on your 1099-S, contact the closing agent immediately and request a corrected form. They'll file the corrected version with the IRS and send you an updated copy.
Key Rules for 2021
Understanding when Form 1099-S is not required is just as important as knowing when it is. Here are the major exceptions that applied in 2021:
1. Principal Residence Exclusion (“$250,000/$500,000 Rule”)
Your closing agent doesn't have to file Form 1099-S if you certify in writing that:
- The property was your principal residence (where you lived for at least 2 of the last 5 years)
- The sale price was $250,000 or less (or $500,000 or less if you're married filing jointly)
- You had no period of “nonqualified use” after December 31, 2008
- The full amount of your gain qualifies for the Section 121 home-sale exclusion
This certification must be signed under penalty of perjury and kept by the closing agent for four years.
2. Sales Under $600
If the total consideration (money, property, and services) is less than $600, no Form 1099-S is required.
3. Corporate or Governmental Sellers
Sales by corporations, partnerships, LLCs taxed as corporations, government entities, or “exempt volume transferors” (businesses that sell at least 25 properties per year in their regular course of business) are exempt from 1099-S reporting.
4. Non-Sale Transactions
The following are NOT reportable on Form 1099-S:
- Gifts or inheritances
- Foreclosures and transfers in lieu of foreclosure
- Financing or refinancing not related to acquiring property
- Sales of mobile homes not affixed to a foundation
- Sales of natural resources (except standing timber), burial plots, or crops
5. Foreign Sellers
If you're a foreign person (nonresident alien), the sale is still reportable on Form 1099-S, and the buyer may have withholding obligations under FIRPTA.
Step-by-Step Filing Process (High Level)
For Sellers (Property Owners)
Step 1: Provide Your Taxpayer ID Number
At or before closing, the settlement agent should request your taxpayer identification number (Social Security Number or Employer Identification Number) using Form W-9.
Step 2: Determine If an Exception Applies
If your sale qualifies for the principal residence exclusion, your closing agent may ask you to sign a certification statement.
Step 3: Receive Your Copy
If Form 1099-S is filed, you'll receive Copy B by February 15, 2022 (for 2021 sales). Keep this for your tax records.
Step 4: Report on Your Tax Return
Even if you don't owe taxes, you must report the sale on your 2021 tax return if you received a 1099-S. Typically, this goes on:
- Form 8949 and Schedule D for personal residences or investment property
- Form 4797 for rental property or business real estate
For Closing Agents (Settlement Companies, Title Companies, Escrow Officers)
Step 1: Determine Who Must File
The “person responsible for closing” is typically the settlement agent listed on the Closing Disclosure.
Step 2: Collect Seller Information
Request the seller's name, address, and taxpayer ID number using Form W-9 no later than closing.
Step 3: Calculate Gross Proceeds
Report the total gross proceeds in Box 2, including:
- Cash received
- Stated principal of any note or mortgage
- Any debt assumed by the buyer
Do not reduce proceeds by seller’s expenses.
Step 4: File Form 1099-S
File Copy A with the IRS and furnish Copy B to the seller by February 15, 2022.
Common Mistakes and How to Avoid Them
Mistake #1: Not Providing Your TIN at Closing
Impact: The closing agent may be required to file Form 1099-S even if your sale qualifies for an exception.
Solution: Always complete Form W-9 when requested at closing.
Mistake #2: Incorrectly Certifying Principal Residence Exception
Impact: You could face penalties for false statements.
Solution: Review the certification requirements carefully.
Mistake #3: Name/TIN Mismatches
Impact: Mismatches can trigger IRS notices.
Solution: Ensure your name matches your Social Security card.
Mistake #4: Not Reporting the Sale
Impact: You may receive a CP2000 notice.
Solution: Always report sales even if no tax is due.
Mistake #5: Confusing Gross Proceeds with Taxable Gain
Impact: Box 2 shows the total sale price, not taxable gain.
Solution: Subtract your basis and expenses to find actual gain.
Mistake #6: Multiple Sellers Not Allocating Proceeds
Impact: Each co-owner may receive an incorrect 1099-S.
Solution: Provide allocation details before closing.
Mistake #7: Ignoring Box 6 (Buyer's Real Estate Tax)
Impact: Can affect your property tax deduction.
Solution: Adjust your Schedule A deduction accordingly.
What Happens After You File
For Sellers
- IRS Matching Program
The IRS receives a copy of your Form 1099-S and compares it to your tax return. - Reporting on Your Return
Use Form 8949 and Schedule D to report proceeds, basis, and gain/loss. - Tax Consequences
- Principal residence: Up to $250,000 ($500,000 married) gain excluded.
- Investment property: Capital gains tax may apply.
- Losses: Deductible only for investment or business property.
For Closing Agents
- Record Retention
Keep all related forms for at least four years. - Penalty Exposure
Late or incorrect filing can result in fines from $50–$570 per form. - State Reporting
Check your state’s rules for additional requirements.
FAQs
Q1: Do I always get a Form 1099-S when I sell my house?
No. If your gain qualifies for the home-sale exclusion, the closing agent typically won't file the form.
Q2: What if I lost my Form 1099-S or never received it?
Contact your closing agent for a duplicate copy.
Q3: Does receiving a Form 1099-S mean I owe taxes?
Not necessarily. The form just reports the transaction.
Q4: What’s the difference between “gross proceeds” and taxable gain?
Gross proceeds are the total sales price; taxable gain subtracts basis, expenses, and exclusions.
Q5: I sold an inherited property. How does that affect my Form 1099-S?
Inherited property gets a “step-up in basis” to fair market value at death, often reducing taxable gain.
Q6: Can I file Form 1099-S myself as the seller?
Generally no. The settlement agent or title company is responsible for filing.
Q7: What should I do if the information on my Form 1099-S is wrong?
Contact the closing agent for correction, or explain discrepancies on your tax return if unresolved.
Additional Resources
