Form 1099-S: Proceeds From Real Estate Transactions (2023)

What Form 1099-S Is For

Form 1099-S is an information return used to report the sale or exchange of real estate to the Internal Revenue Service (IRS). Think of it as a receipt that officially documents your real estate transaction for tax purposes. When you sell property—whether it's your home, a piece of land, a rental property, or even a timeshare with at least 30 years remaining on it—the person or company handling your closing typically must file this form. IRS.gov

The form captures essential information including the date of closing, the gross proceeds from the sale (generally the sales price), and the property's address. It's important to understand that you don't file Form 1099-S yourself—the closing agent, real estate attorney, title company, or other settlement professional files it with the IRS and provides you with a copy. However, if you receive one, you must report the sale on your tax return, even if you don't owe any taxes on the transaction. IRS.gov

Form 1099-S covers various types of real estate including improved or unimproved land, residential and commercial buildings, condominiums, cooperative housing corporation stock, and interests in standing timber. Essentially, if money or property changes hands for any present or future ownership interest in real estate, it's likely reportable—with some important exceptions we'll discuss later.

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

For closing agents and settlement professionals

The standard filing deadline for Form 1099-S is January 31 following the year of sale. If you closed on a property sale in 2023, the form must be filed with the IRS by January 31, 2024. The copy provided to the seller (you) is also due by this date, though for real estate transactions specifically, copies may be furnished to transferors at closing or by mail on or before the February deadline. IRS.gov

Corrected or amended forms

Mistakes happen. If the closing agent discovers an error after filing—such as an incorrect sale price, wrong taxpayer identification number, or inaccurate property address—they must file a corrected Form 1099-S. This involves checking a box indicating it's a correction and submitting the accurate information. The General Instructions for Certain Information Returns provide detailed guidance on making these corrections.

For sellers who didn't receive one

If you sold real estate in 2023 and believe you should have received a Form 1099-S but didn't, you're still required to report the sale on your tax return using your closing documents and settlement statements. The absence of Form 1099-S doesn't eliminate your reporting obligation. Contact your closing agent if you believe a form should have been issued.

Late filing penalties

Closing agents who fail to file Form 1099-S by the deadline may face penalties ranging from $60 to $310 per form (for 2023), depending on how late the filing is, with potential annual maximum penalties. These penalties underscore the importance of timely and accurate filing. IRS.gov

Key Rules or Details for 2023

The Primary Residence Exemption

The most common exemption applies to the sale of your main home. If you sold your principal residence for $250,000 or less ($500,000 for married couples filing jointly), and you can exclude all the gain under Section 121 of the tax code, the closing agent doesn't have to file Form 1099-S—but only if you provide a written certification under penalties of perjury. This certification must state that the property was your principal residence, that you meet all exclusion requirements, that there was no period of "nonqualified use" after December 31, 2008, and that the full gain is excludable. Without this certification, Form 1099-S must be filed regardless of the sale price. IRS.gov

Other exemptions include

De minimis sales: Transactions where total consideration is less than $600
Corporate sellers: Sales by corporations, government entities, or "exempt volume transferors" (entities that sell at least 25 separate properties to 25 separate buyers annually)
Gifts and inheritances: Transfers that aren't true sales or exchanges
Foreclosures and debt satisfaction: Transfers in full or partial satisfaction of a secured debt
Mobile homes: Unattached manufactured homes not affixed to a foundation (unless sold with land) IRS.gov

Multiple owners

When property has multiple sellers, the closing agent must file a separate Form 1099-S for each owner, unless they're married spouses who held the property jointly—in which case only one form is required (unless the spouses request separate reporting with an allocation of proceeds).

Foreign sellers

If you're a foreign person (nonresident alien, foreign partnership, estate, or trust), the closing agent must check a special box on Form 1099-S, which triggers separate withholding requirements under the Foreign Investment in Real Property Tax Act (FIRPTA).

Step-by-Step (High Level)

Step 1: Before or at closing

The person responsible for closing (typically the settlement agent, title company, or real estate attorney) will request your taxpayer identification number (TIN), usually via Form W-9. This must occur no later than the closing date. You're legally required to provide your correct TIN and certify its accuracy under penalties of perjury.

Step 2: Determining if filing is required

The closing agent evaluates whether the transaction qualifies for an exemption. If you're selling your primary residence and it qualifies for the Section 121 exclusion, the agent should ask you to sign a certification statement. Without this certification, they must file Form 1099-S even if your sale price is below the exclusion threshold.

Step 3: Calculating gross proceeds

The form reports gross proceeds, which generally equals the contract sales price shown on your Closing Disclosure or settlement statement. This includes cash received, the principal amount of any note you receive, mortgages assumed by the buyer, and any liabilities the buyer takes over. It does not include the value of other property or services exchanged, your selling expenses (like real estate commissions or legal fees), or separately stated personal property like appliances.

Step 4: Filing and furnishing

The closing agent files Form 1099-S with the IRS by January 31 and provides you with your copy, usually at closing or shortly thereafter. If you're one of multiple sellers, each owner receives a separate form showing their allocated share of proceeds.

Step 5: Your tax reporting

When you receive Form 1099-S, you must report the sale on your tax return—typically on Form 8949 (Sales and Other Dispositions of Capital Assets) and Schedule D (Capital Gains and Losses). Even if you qualify to exclude all the gain, you still must report the transaction if you received Form 1099-S. Use Publication 523 (Selling Your Home) for detailed guidance on calculating your gain and determining if you qualify for exclusions. IRS.gov

Common Mistakes and How to Avoid Them

Mistake #1: Not providing certification for principal residence sales

Many sellers assume the closing agent will automatically know their home qualifies for the Section 121 exclusion. Without a signed written certification, the agent must file Form 1099-S even for small-value home sales. Solution: If you're selling your primary residence and expect to exclude the gain, proactively ask your closing agent about providing the certification statement before closing.

Mistake #2: Incorrect taxpayer identification numbers

Providing an incorrect Social Security number or other TIN causes processing problems and can result in backup withholding (where 24% is withheld from your proceeds). Solution: Double-check your TIN on Form W-9 before submitting it. If your name has changed (through marriage, for example), ensure it matches IRS and Social Security Administration records.

Mistake #3: Confusion about who files

Some sellers mistakenly think they need to file Form 1099-S with their tax return. Solution: Remember, Form 1099-S is an information return filed by the closing agent, not by you. You simply use the information it contains to report the sale on your Form 1040.

Mistake #4: Ignoring Form 1099-S when gain is excludable

Many people assume that if they qualify for the $250,000/$500,000 home sale exclusion, they don't need to report the sale at all. However, if you received Form 1099-S, the IRS expects to see that transaction reported on your return. Solution: Always report real estate sales on your tax return when you receive Form 1099-S, showing the exclusion calculation on Form 8949 or using the appropriate worksheet.

Mistake #5: Misunderstanding gross proceeds

Some sellers confuse gross proceeds with net proceeds (what you walked away with after paying off mortgages, commissions, and closing costs). Form 1099-S reports gross proceeds—essentially the sales price before expenses. Solution: Use your complete closing documents and settlement statement to calculate your actual taxable gain, which accounts for your adjusted basis and selling expenses.

Mistake #6: Multiple owners not requesting allocation

When several people jointly own property, failing to allocate proceeds properly can result in each owner receiving a form showing the full sales price. Solution: Before closing, co-owners should agree on and communicate the allocation of proceeds to the closing agent in writing.

What Happens After You File

For closing agents

After filing Form 1099-S with the IRS, the data enters the IRS Information Returns Processing (IRP) system. The IRS matches these forms against taxpayer returns. If a taxpayer receives Form 1099-S but doesn't report the sale, the IRS may send a CP2000 notice (Underreporter Inquiry) proposing additional tax, penalties, and interest.

For property sellers

Once you receive your copy of Form 1099-S, you'll use it to prepare your federal tax return (and likely state return as well). You'll report the sale on Form 8949, calculate your capital gain or loss, and carry the result to Schedule D. If you're claiming the Section 121 exclusion for your primary residence, you'll need to complete a worksheet showing how you arrived at your excludable gain.

Audit and verification

The IRS uses Form 1099-S information to verify that real estate transactions are properly reported. Discrepancies between what's reported on Form 1099-S and what appears on your tax return can trigger inquiries or audits. This is why accuracy is critical on both ends—closing agents must file correctly, and sellers must report comprehensively.

Record retention

Closing agents must retain copies of Forms 1099-S and related documentation (including written certifications and Form W-9s) for at least four years. Property sellers should keep all closing documents, settlement statements, receipts for improvements, and Form 1099-S indefinitely as part of their permanent tax records—especially important for calculating basis in future transactions or defending against IRS inquiries.

State reporting

Many states have their own real estate reporting requirements separate from the federal Form 1099-S. Some states require additional forms or withholding for state income tax purposes. Check with your state's tax agency or closing agent about state-specific requirements.

FAQs

Q: I sold my home for $300,000 but only made $50,000 profit. Do I need to worry about Form 1099-S?

A: It depends. The $250,000/$500,000 refers to your gain (profit), not the sales price. If you sold your principal residence, lived there at least two of the past five years, and your gain is under $250,000 ($500,000 married filing jointly), you can likely exclude all the gain from tax. However, whether you receive Form 1099-S depends on whether you provided the closing agent with a written certification. If you did and your gain is fully excludable, no Form 1099-S is required. If you didn't provide certification, you'll receive Form 1099-S and must report the sale—but you can still claim the exclusion on your return. IRS.gov

Q: I received Form 1099-S for a sale that qualifies for the Section 121 exclusion. Do I have to file it with my tax return?

A: You don't file Form 1099-S itself with your return, but you do need to report the transaction. Include the sale on Form 8949 and Schedule D, indicating that the gain is excludable under Section 121. The IRS knows you received Form 1099-S and expects to see the transaction documented on your return, even when the gain is fully excluded.

Q: What if the amount shown on Form 1099-S is wrong?

A: Contact the person who issued the form (the closing agent or settlement company) immediately and request a corrected Form 1099-S. They can file a correction with the IRS and provide you with the accurate version. When preparing your tax return, use the correct figures from your actual closing documents. If you can't get a corrected form in time, report the correct amount on your return and attach an explanation.

Q: I sold investment property through a 1031 exchange. Will I get Form 1099-S?

A: Yes, like-kind exchanges (1031 exchanges) are reportable transactions. You'll receive Form 1099-S showing the gross proceeds, even though the exchange may defer your tax liability. When filing your return, you'll report the exchange on Form 8824 (Like-Kind Exchanges) and explain the tax treatment there.

Q: Do I need Form 1099-S to file my taxes, or can I report the sale without it?

A: You can and must report your real estate sale even if you don't receive Form 1099-S. Use your HUD-1 Settlement Statement, Closing Disclosure, or other closing documents to determine the sales price, closing date, and other necessary information. The absence of Form 1099-S doesn't eliminate your reporting obligation. IRS.gov

Q: I inherited a house and sold it. Will I get Form 1099-S?

A: Generally, yes. The sale of inherited property is a reportable real estate transaction. You'll receive Form 1099-S showing the gross proceeds. When calculating your gain or loss, your basis is typically the fair market value of the property on the date of the decedent's death (stepped-up basis), which often results in little or no taxable gain if sold relatively soon after inheritance.

Q: Can the closing agent charge me separately for preparing Form 1099-S?

A: No. Federal regulations specifically prohibit closing agents from charging a separate fee for Form 1099-S preparation and filing. However, they can factor the cost into their overall closing service fees. If you're charged a line-item fee specifically for Form 1099-S preparation, this violates IRS rules. IRS.gov

Additional Resources

This guide provides general information for educational purposes and is based on authoritative IRS sources. For advice specific to your situation, consult a qualified tax professional.

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Checklist for Form 1099-S: Proceeds From Real Estate Transactions (2023)