The transaction is not reportable if the total money, services, and property received are less than $600.If the “transferor” (seller) is a corporation or a government unit (e.g., if the property is sold at a county auction), the transaction is not reportable.The transaction is not reportable if the seller certifies that the sale is for $250K or less and the sale is for their principal residence.If you close a transaction with a title company or attorney (as most people do), they will collect the necessary information and file Form 1099-S for you.Who Has to File IRS Form 1099-S?ĭepending on the sale price, who acts as the closing agent, who the seller is, and what kind of property is being bought and sold (among other things), there may be some differences in who is responsible for filing the 1099-S. Be sure to cross-check this information with your own tax professional before you move forward. Everything you read here is based on my conclusions after reading the IRS Instructions for Form 1099-S (and given how convoluted these instructions are, your CPA or attorney may have a different opinion than me). The purpose of IRS Form 1099-S is to ensure that sellers report their full capital gains on each year's tax return (and, thus, pay the appropriate taxes to the IRS).įor example, if someone buys an investment property for $100,000 and sells it for $150,000 (giving them $50,000 of capital gains income) – they're supposed to report this as taxable income at the end of each year… but if they don't, the 1099-S will act as a safeguard by keeping the IRS informed about what's going on.ĭisclaimer: The information in this article should not be interpreted as legal or financial advice. IRS Form 1099-S is an important (and often overlooked) step in the closing process for most real estate transactions, and if you're in the practice of closing deals yourself, this is something you probably ought to be doing.
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