What Is Form 1099-S?
Form 1099-S is the IRS information return used for real-estate proceeds reporting. When a seller transfers real property, such as a home, condominium, co-op, parcel of land, or even standing timber. You generally report the gross proceeds on this form. Under the 1099-S filing requirements, the person responsible for closing the transaction, usually the settlement or escrow agent or closing attorney, must file the form, provide a copy to the seller, and send the information to the IRS.
In most cases, there is effectively no minimum reporting amount. However, the IRS does have a de minimis 1099-S threshold $600 exception: if the total consideration at closing date is under $600, you do not file. Certain 1099-S exemptions may also apply, especially for a qualifying principal residence, which this guide explains in detail.
Why does 1099-S matter?
Form 1099-S plays a central role in IRS data matching. The IRS compares the 1099-S data with the seller’s income tax return to verify that any gain from the sale is reported. If a required form is missing or incorrect, this mismatch can generate IRS notices and follow-up questions.
Failure to comply with the 1099-S filing requirements carries real cost. Penalties for late, incomplete, or incorrect forms generally start at $60 per form and can rise to $340 per form, with at least $680 per form for intentional disregard. Some states may also receive the same real-estate proceeds reporting data from the IRS if they are participating in the CF/SF program, so even a single error may lead to federal and state-level issues. As you plan for the 1099-S due date 2026, these risks become even more important.
How 1099Online helps: The platform performs real-time TIN checks to catch invalid IDs before filing, supports bulk upload from your closing spreadsheets, and sends deadline alerts so you stay ahead of key dates such as February 17 and March 31 e-file cutoffs, including the 1099-S due date 2026.
Who Must File & Threshold Rules
For Form 1099-S, the obligation to file usually follows the role you play at closing, not your job title.
In most transactions, the settlement or escrow agent must file Form 1099-S. This is the party responsible for closing the deal and handling the funds and paperwork. They must report any non-exempt sale or exchange of real estate, even if the amount is relatively small. There is no general $600 trigger the way there is for some other information returns. However, a limited de minimis rule applies: if the total consideration for the transaction is less than $600, no Form 1099-S is required.
If there is no settlement or escrow agent, the attorney who prepares the closing documents typically steps into the reporting role and must file Form 1099-S.
A mortgage lender or broker only has to file when they act as the settlement agent. Simply providing financing does not, by itself, create a filing duty.
The seller (transferor) almost never files Form 1099-S. Their responsibility is to use the information on the form to properly report the sale on their tax return, not to issue the form.
Certain parties qualify as exempt sellers, including corporations, government entities, and high-volume transferors. You may treat them as exempt only if you obtain a properly signed exemption certificate and retain it in your records.
When a property has multiple sellers, you must file one Form 1099-S for each seller, reporting only that seller’s share of the gross proceeds.
Reportable vs. Non-Reportable Transactions
Form 1099-S applies to most real estate sales and exchanges. You generally report transactions where the seller receives gross proceeds from the transfer of real property. This includes sales of land, residential and commercial buildings, condominiums, cooperative housing shares, and standing timber.
Like-kind exchanges under section 1031 are generally reportable through gross proceeds in Box 2 and check Box 4 to indicate an exchange rather than a traditional sale.
Certain transactions are not reportable. You do not file Form 1099-S for transfers made in full or partial satisfaction of a debt secured by the property, such as foreclosures, deeds in lieu of foreclosure, or abandonments. Short sales that result in a transfer in satisfaction of debt may fall under this exception as well. You also do not report gifts, inheritances, or refinances where there is no change in ownership, or sales where the total consideration is less than $600.
The principal residence can be excluded from reporting only if the seller signs a valid Section 121 gain-exclusion certification. If you do not have that signed certificate on or before January 31 of the year after the sale, you must still issue a Form 1099-S for the transaction.
When to File Your 1099-S
You must pay close attention to three separate deadlines for Form 1099-S.
- Copy B to the seller: Provide the seller’s copy at closing whenever possible. If you do not deliver it at closing, you must mail or electronically deliver Copy B no later than Tuesday, February 17, 2026.
- IRS paper filing: If you file on paper, the IRS must receive Form 1099-S by Monday, March 2, 2026 (the standard March 1 deadline rolls forward because it falls on a Sunday).
- IRS e-file: If you file electronically, whether through 1099Online or the IRS IRIS system, you must transmit your forms by Tuesday, March 31, 2026.
Step-by-Step Pre-Filing Checklist for Form 1099-S
Before you file Form 1099-S, move through a clear pre-filing checklist, so you do not miss anything.
1. Collect seller information
At closing, obtain a signed Form W-9 from each seller. Store the W-9 securely and upload it to 1099Online so you have one-click access when you prepare the form.
2. Run a TIN check
Use the TIN Check feature before you file. A green result confirms the TIN/name combination is valid; a red result signals a problem you should fix before transmission to avoid notices.
3. Confirm the transaction is reportable
Confirm that the transaction is a sale or exchange of real property and that total consideration is $600 or more unless an exception applies. Verify that the seller has not provided a valid exemption certificate (for example, a signed principal residence certification)?
4. Complete the form accurately
Use the closing statement (HUD-1 or Closing Disclosure) to complete key boxes:
Box 1: Enter the closing date.
Box 2: Report the full sale price, with no deductions.
Box 4: Check only if the transaction is a like-kind exchange.
5. Deliver Copy B to the seller
Provide Copy B at closing or send it by February 17, 2026. 1099Online records electronic delivery or mailing details automatically for your files.
6. File with the IRS
Submit forms electronically through 1099Online by March 31, 2026. You may file on paper only if you file fewer than 10 total information returns for 2025; in that case, the IRS must receive your paper forms by Monday, March 2, 2026. 1099Online provides an immediate IRIS acknowledgment in your dashboard.
7. Archive and monitor
Keep digital copies for at least four years. Use dashboard alerts to track any IRS rejections so you can correct and retransmit quickly.
Fixing Common Form 1099-S Filing Mistakes
Even experienced payers make recurring mistakes with Form 1099-S. Addressing them early significantly reduces penalty risk.
- A frequent error is reporting net proceeds instead of gross. This understates the transaction and can trigger accuracy penalties. To avoid this, always import or reference the gross proceeds directly from the Closing Disclosure or HUD statement and enter that amount in Box 2 with no deductions.
- Payers sometimes skip reporting a residence sale without having a signed Section 121 gain-exclusion certificate. This mismatch often generates IRS notices. The remedy is simple: either collect and retain the certificate on or before January 31 of the year following the sale, or file Form 1099-S as required.
Real-Life Scenarios for 1099-S
Below are five common closing scenarios and how to handle 1099-S filing requirements in each case.
1. $325,000 home with a signed Section 121 certificate
The seller signs a valid principal residence (Section 121) gain-exclusion certificate at closing. In this case, the transaction is not reportable on Form 1099-S. You simply keep the signed certificate in your records for at least four years to substantiate the 1099-S exemption for a principal residence.
2. $50,000 vacant lot sold by an individual
An individual sells a vacant lot for $50,000. This sale is fully reportable because it exceeds the 1099-S threshold of $600 and does not qualify for a principal residence exemption. Report $50,000 in Box 2 and furnish Copy B to the seller by February 17, 2026.
3. $1,000,000 condo sold by a C corporation
A C corporation sells a condo for $1 million. Corporations often qualify as exempt sellers when they provide a properly signed exemption certificate. If you obtain and retain a signed corporate exemption certificate, you do not file Form 1099-S. Keep that certificate with your permanent records.
4. Like-kind exchange with no cash boot
Two parties swap investment properties in a like-kind exchange, and no one receives cash boot. You must still report the transaction. File Form 1099-S, check Box 4 to show that this is a like-kind exchange rather than a standard sale. Enter gross proceeds in Box 2 only if the transferor receives money, other property, or the transferee assumes liabilities. Enter ‘0’ only if there is truly no consideration.
5. Timber sale paid over time
A landowner sells standing timber with payments spread over several dates. Each payment represents part of the gross proceeds from the real-estate-related transaction. You generally must report the sale once using the appropriate sale or payment date as required. Form 1099-S does not require separate filings for each installment payment.
FAQs
1. Is there a $600 limit?
Yes. A de minimis exception applies when the total consideration for the transaction is less than $600, measured at closing and applied to the transaction as a whole. If the total is below $600, Form 1099-S is generally not required. When you do file, you must file a separate Form 1099-S for each transferor (seller).
2. Do I file if a lender forecloses and the seller gets no money?
Usually, no. In most foreclosure situations, Form 1099-S is not required. Other reporting (such as Form 1099-A or 1099-C) may apply, but that is separate from 1099-S real-estate proceeds reporting.
3. Can I email Copy B?
Yes. You may email Copy B if the seller consents to electronic delivery and you satisfy the IRS GIR electronic furnishing requirements (for example, proper consent language, access, and withdrawal options). 1099Online can help you manage electronic furnishing in a compliant way.
4. How do I handle three sellers?
You must file three separate Forms 1099-S, one for each seller. Each form should show that seller’s share of the gross proceeds and correct seller information.
5. Do foreign sellers get a 1099-S?
Yes. You must file Form 1099-S for foreign sellers as well, even when FIRPTA withholding applies. The withholding under FIRPTA does not replace your 1099-S filing obligations.
6. How do I correct a mistake?
If you discover an error after filing, submit a CORRECTED Form 1099-S. With 1099Online, you can file the corrected return electronically, usually within 30 days, and track the updated IRIS acknowledgment in your dashboard.
7. Is backup withholding ever needed?
Real-estate-proceeds reported on Form 1099-S are generally excluded from backup-withholding requirements.
Final Thought
Avoid manual paperwork, missed deadlines, and costly penalties. With 1099Online, you can import closing data directly from your spreadsheets, validate TINs in seconds, and e-file all required 1099-S forms in just a few clicks fully aligned with the 1099-S e-file mandate and IRS rules.
Start filing 1099-S with 1099Online today