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Who is required to report to the
I.R.S.?
Sellers of real property, under guidelines established by the
I.R.S., are required to have their gross proceeds from the sale reported on a
Form 1099S. When a settlement agent is used, the I.R.S. makes this agent
responsible for the delivery of the information on the Form 1099S. The
settlement agent generally will be the escrow agent or title company; however,
it may be an attorney, real estate broker or other person providing settlement
services.
What is an I.R.S. Form 1099S, and what will
be reported?
The Form 1099S is the reporting form adopted by the I.R.S.
for submitting the information required by law. The information will be
transferred onto magnetic media by the settlement agent who will store the
information and make the required report to the I.R.S. The settlement agent is
also responsible for keeping a master copy of all transactions reported. In
general, information required by the I.R.S. falls into the following
categories:
- The name, address and taxpayer ID number (social security
or tax identification #) of the seller(s).
- A general description of the property (in most cases and
address.)
- The closing date of the transaction.
- The gross proceeds of the transaction (even though gross
proceeds do not correspond to taxable income.)
- Any property involved as part of the transaction other
than cash or cash equivalent.
- The name, address and taxpayer identification number of
the settlement agent.
On what type of transaction is a Form 1099S
Required?
Currently, typical homeowner transactions covered include
sales and exchanges of 1-4 family residential properties such as houses and
condominiums. Also reportable is stock in cooperative housing corporations and
mobile homes without wheels. Specifically excluded from reporting are
foreclosures and abandonment of real property and financing or refinancing of
properties.
What happens if the seller(s) refuse(s) to
provide the taxpayer identification number for the form 1009S?
Should
the seller fail to provide the identification number and certify its
correctness, the settlement agent may choose
- Delay the closing of the transaction until the
information is furnished, or
- Complete the transaction and report to the I.R.S. that
an attempt was made to obtain the information from the seller.
How is the sale reported when there is more
than one seller involved or when multiple sellers do not own equal interests in
the property?
Multiple sellers may allocate the gross proceeds among
themselves for purposes or reporting. If there is no allocation, an incomplete
allocation or conflicting allocations, then the entire gross proceeds will be
reported for each seller.
Where can I go for further information on
taxation of real property?
The I.R.S. provides free publications that
explain the tax aspects real estate transactions you may wish to order:
Publication #523 - "Tax Information on Selling Your Home"
Publication
#530 - "Tax Information for Owners of Homes, Condominiums and Cooperative
Apartments"
Publication #544 - "Sales and Other Disposition of Assets"
Publication #551 - "Basis of Assets"
To Place your Order, Phone
Toll-Free (800) TAX FORM
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