All About 1099-S Forms

All About 1099-S Forms

Did you receive a 1099-S from Land Title and wonder why you received it?

PRO TIP: Work with a tax professional or check out the IRS website to learn more (the below is an informational overview only).

IRS Form 1099-S is a tax document used to ensure that the full amount of capital gains received for a real estate sale are accurately reported to the IRS. For example, if someone buys an investment property for $100,000 and sells it for $150,000 (giving them $50,000 of capital gains income) this should be reported 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.

The “Certification for No Information Reporting on the Sale or Exchange of a Principal Residence” is a form that may be completed by the seller of a principal residence. This form will assist the title company in determining whether the sale or exchange of the property should be reported to the IRS on Form 1099-S.

A copy of the 1099 certification form is presented to the sellers at closing. There are a few criteria to keep in mind including the sales price for an individual seller and for a married couple. If the property sales price is in excess of $250,000 for an individual or $500,000 for a married couple, regardless of the amount of gain, the IRS requires the sale to be reported on Form 1099-S.

There are additional reporting exemptions under Part II “Seller Assurances” 1 through 6. Your Land Title Sales Representative can provide you with a complete copy of the Certification form if you would like to review the assurances yourself or with a tax pro.

Additionally, the certification rule applies only to principal residences. Corporations, limited liability companies, partnerships, limited liability partnerships, and trusts in general do not qualify to own a principal residence.

If you completed a real estate transaction with Land Title Guarantee Company, your closer will help with the paperwork during the closing process, we will submit it on your behalf and you will receive a 1099-S the following January.

Important Tip: This is meant to be informational only. Work with a tax pro or check out the IRS website to learn more.