Form 1099-S Proceeds from Real Estate Transactions, is the official form used to report the sale or exchange of real estate. Generally, you are required to file form 1099-S to report a transaction that consists in whole or in part of the sale or exchange for money, indebtedness, property, or services of any present or future ownership interest in any of the following:

• Improved or unimproved land, including air space;
• Inherently permanent structures, including any residential, commercial, or industrial building;
• A condominium unit and its appurtenant fixtures and common elements, including land;
• Stock in a cooperative housing corporation (as defined in section 216); and
• Any non-contingent interest in standing timber.

Generally, the person responsible for closing the transaction, as explained in 1 below, is required to file Form 1099-S. If no one is responsible for closing the transaction, the person required to file Form 1099-S is explained in 2, later. However, you may designate the person required to file Form 1099-S in a written agreement, as explained under 3, later.

• If you are the person responsible for closing the transaction, you must file Form 1099-S. If a Uniform Settlement Statement prescribed under the Real Estate Settlement Procedures Act of 1974 (RESPA) is used and a person is listed as the settlement agent on the statement, the person responsible for closing the transaction is the person listed as the settlement agent on that statement. A Uniform Settlement Statement includes any amendments, variations, or substitutions that may be prescribed under RESPA if any such form requires disclosure of the transferor and transferee, the application of the proceeds, and the identity of the settlement agent or other person responsible for preparing the form.
  
  If a Uniform Settlement Statement is not used, or no settlement agent is listed, the person responsible for closing the transaction is the person who prepares the closing statement, including a settlement statement (including a Uniform Settlement Statement) or other written document that identifies the transferor and transferee, reasonably identifies the real estate transferred, and that describes how the proceeds are to be or were disbursed. If no closing statement is used, or if two or more statements are used, the person responsible for closing the transaction is, in the following order:
  • The transferee's attorney who is present at the delivery of either the transferee's note or a significant part of the cash proceeds to the transferor or who prepares or reviews the preparation of the documents transferring legal or equitable ownership;
  • The transferor's attorney who is present at the delivery of either the transferee's note or a significant part of the cash proceeds to the transferor or who prepares or reviews the preparation of the documents transferring legal or equitable ownership; or
  • The disbursing title or Escrow Company that is most significant in disbursing gross proceeds. If there is more than one attorney described in (a) or (b), the one whose involvement is most significant is the person considered responsible for closing the transaction
• If no one is responsible for closing the transaction as explained in 1 on this page, the person responsible for filing is, in the following order: (a) the mortgage lender, (b) the transferor's broker, (c) the transferee's broker, or (d) the transferee.
• Designation agreement. You can enter into a written agreement at or before closing to designate who must file Form 1099-S for the transaction. The agreement will identify the person responsible for filing if such designated person signs the agreement. It is not necessary that all parties to the transaction (or that more than one party) enter into the agreement
  You may be designated in the agreement as the person who must file if you are the person responsible for closing the transaction (as explained in 1 on page 2), the transferee's or transferor's attorney (as explained in 1 on page 2), the title or escrow company that is most significant in disbursing gross proceeds, or the mortgage lender (as explained in 2a on page 2).
  The designation agreement may be in any written form and may be included on the closing statement. It must:
• A corporation that is a subsidiary of a financial institution or credit union, but only if, because of your affiliation, you are subject to
  supervision and examination by a federal or state regulatory agency.
• a. Identify by name and address the person designated as responsible for filing,
• b. Include the names and addresses of each person entering into the agreement,
• c. Be signed and dated by all persons entering into the agreement,
• d. Include the names and addresses of the transferor and transferee, and
• e. Include the address and any other information necessary to identify the property.

Each person who signs the agreement must keep it for 4 years.

The following is a list of transactions that are not reportable; however, you may choose to report them. If you do, you are subject to the rules in these instructions.

• Sale or exchange of a residence (including stock in a cooperative housing corporation) for $250,000 or less if you received an acceptable written assurance (certification) from the seller that such residence is the principal residence (within the meaning of section 121) of the seller and the full amount of the gain on such sale is excludable from gross income under section 121. If the certification includes an assurance that the seller is married, the preceding sentence shall be applied by substituting “$500,000” for “$250,000.” If there are joint sellers, you must obtain a certification from each seller (whether married or not) or file Form 1099-S for any seller who does not make the certification. The certification must be signed by each seller under penalties of perjury.
• Any transaction in which the transferor is a corporation (or is considered to be a corporation under Regulations section 1.6045-4(d)(2)); a governmental unit, including a foreign government or an international organization; or an exempt volume transferor. Under this rule, if there are exempt and nonexempt transferors, you must file Form 1099-S only for the nonexempt transferors
• Any transaction that is not a sale or exchange, including a bequest, a gift (including a transaction treated as a gift under section 1041), and a financing or refinancing that is not related to the acquisition of real estate.
• A transfer in full or partial satisfaction of a debt secured by the property. This includes a foreclosure, a transfer in lieu of foreclosure, or abandonment.
• A de minimis transfer for less than $600. A transaction is de minimis if it can be determined with certainty that the total money, services, and property received or to be received is less than $600, as measured on the closing date. For example, if a contract for sale provides for total consideration of “$1.00 plus other valuable consideration,” the transfer is not a de minimis transfer unless you can determine that the “other valuable consideration” is less than $599, as measured on the closing date. The $600 rule applies to the transaction as a whole, not separately to each transferor.

No reporting is required for the sale or exchange of an interest in the following types of property, provided the sale is not related to the sale or exchange of reportable real estate.

• An interest in surface or subsurface natural resources (for example, water, ores, or other natural deposits) or crops, whether or nor such natural resources or crops are severed from the land. For this purpose, the terms "natural resources" and "crops" do not include standing timber. For timber royalties, see Timber on page 1.
• A burial plot or vault.
• A manufactured structure used as a dwelling that is manufactured and assembled at a location different from that where it is used, but only if such structure is not affixed, on the closing date, to a foundation. This exception applies to the transfer of an unfixed mobile home that is unrelated to the sale or exchange of reportable real estate.

For more information visit: http://www.irs.gov/instructions/i1099b/ar02.html