IRS Form 1099-S is used to report gross proceeds from the sale or exchange of real estate. The settlement agent or person responsible for the closing of the real estate transaction must report the real estate proceeds to the IRS and must furnish Copy B of Form 1099-S to the seller. If the real estate was not your main home, report the transaction on Form 4797, Form 6252, and/or the Schedule D for the appropriate income tax form.
The top of IRS Form 1099-S asks for the filer name and address and the transferor name and address. The filer is the settlement agent and the transferor is the seller. The transferee is the buyer.
The form also asks for the account or escrow number. The account number is just a unique number that the filer uses to distinguish this transferor’s account. If you are submitting less than 250 filings per year, then the account number can be blank. However, if you are submitting 250 or more filing per calendar year, then you need an account number.
There are five boxes on IRS Form 1099-S. Each box is discussed below:
Box 1. Shows the date of closing.
Box 2. Shows the gross proceeds from the real estate transaction which is typically the sales price. Gross proceeds include cash and notes payable to the seller. Box 2 does not incldue the value of other property or services the seller received or will receive.
Box 3. Shows the address or legal description of the property transferred.
Box 4. If checked, represents that the seller received or will receive services or property (other than the cash or notes described in Box 2) as part of the consideration for the property transferred.
Box 5. Shows the Buyer’s part of real estate tax. If the seller has already paid the real estate tax for the period that includes the sale date, subject the amount in box 5 from the amount already paid to determine the seller’s deductible real estate tax. If the seller has already deducted the real estate tax in a prior year, report this amount as income on the “Other income” line of the appropriate income tax form. More information is in Publication 523, Publication 525, and Publication 530.
Copy B of 1099-S forms must be mailed to the seller by January 31. Copy A must be paper filed by the end of February or the settlement agent can efile Copy A by the end of March. If the settlement agent is efiling, they are exempt from using the pre-printed red-ink 1099-S and 1096 forms.
