Proceeds From Real Estate Transactions

2013

Instructions for Form 1099-S

Department of the Treasury
Internal Revenue Service

Proceeds From Real Estate Transactions
Section references are to the Internal Revenue Code unless
otherwise noted.

Future Developments

For the latest information about developments related to
Forms 1099-S, and its instructions, such as legislation
enacted after they were published, go to www.irs.gov/
form1099s.

What's New

Truncating transferor’s identification number on paper
payee statements. Pursuant to proposed regulations §§
1.6042-4(b) and 301.6109-4 (REG-148873-09), all filers of
this form may truncate a transferor’s identification number
(social security number (SSN), individual taxpayer
identification number (ITIN), or adoption taxpayer
identification number (ATIN)) on payee statements. See part
M in the 2013 General Instructions for Certain Information
Returns.

Reminder

In addition to these specific instructions, you should also use
the 2013 General Instructions for Certain Information
Returns. Those general instructions include information
about the following topics.
Backup withholding.
Electronic reporting requirements.
Penalties.
Who must file (nominee/middleman).
When and where to file.
Taxpayer identification numbers.
Statements to recipients.
Corrected and void returns.
Other general topics.
You can get the general instructions from www.irs.gov/
form1099s or by calling 1-800-TAX-FORM
(1-800-829-3676).

Specific Instructions

File Form 1099-S, Proceeds From Real Estate Transactions,
to report the sale or exchange of real estate.

Reportable Real Estate

Generally, you are required 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:
1. Improved or unimproved land, including air space;
2. Inherently permanent structures, including any
residential, commercial, or industrial building;
3. A condominium unit and its appurtenant fixtures and
common elements, including land;
4. Stock in a cooperative housing corporation (as defined
in section 216); and
5. Any non-contingent interest in standing timber.
Sale or exchange. A sale or exchange includes any
transaction properly treated as a sale or exchange for federal
income tax purposes, even if the transaction is not currently
Dec 18, 2012

taxable. For example, a sale of a main home may be a
reportable sale even though the transferor may be entitled to
exclude the gain under section 121. But see Exceptions on
this page. Also, a transfer to a corporation that qualifies for
nonrecognition of gain under section 351 is a reportable
exchange. In addition, a transfer under a land contract is
reportable in the year in which the parties enter into the
contract.
Ownership interest. An ownership interest includes fee
simple interests, life estates, reversions, remainders, and
perpetual easements. It also includes any previously created
rights to possession or use for all or part of any particular
year (for example, a leasehold, easement, or timeshare), if
such rights have a remaining term of at least 30 years,
including any period for which the holder may renew such
rights, determined on the date of closing. For example, a
preexisting leasehold on a building with an original term of 99
years and a remaining term of 35 years on the closing date is
an ownership interest; however, if the remaining term is 10
years, it is not an ownership interest. An ownership interest
does not include any option to acquire real estate. An
ownership interest also includes any contractual interest in a
sale or exchange of standing timber for a lump-sum payment
that is fixed and not contingent.
Involuntary conversion. A sale of real estate under threat
or imminence of seizure, requisition, or condemnation is
generally a reportable transaction.
Timber. Report on Form 1099-S payments of timber
royalties made under a pay-as-cut contract, reportable under
section 6050N. For more information, see Announcement
90-129, 1990-48 I.R.B. 10.

Exceptions

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.
1. 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.
A sample certification format can be found in Revenue
Procedure 2007-12, 2007-4 I.R.B. 354, available at
www.irs.gov/irb/2007-04_IRB/ar09.html.
Rev. Proc. 2007-12 does not reflect changes made
by Public Law 110-289, section 3092(a), which
CAUTION
added section 121(b)(4 [sic (5)]). The sample
certification included in Rev. Proc. 2007-12 does not include
an assurance that there has been no period of nonqualified
use (as that term is defined in section 121(b)(4 [sic (5)])(C))
after December 31, 2008. Also, the sample certification

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Cat. No. 27988X

Who Must File

included in Rev. Proc. 2007-12 does not include an
assurance, as required by section 6045(e)(5)(A)(iii), that the
full amount of the gain from the sale is excludable under
section 121.

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.
1. 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:
a. 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;
b. 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
c. The disbursing title or escrow company that is most
significant in disbursing gross proceeds.

You may get the certification any time on or before
February 15 of the year after the year of sale. You may rely
on the certification and not file or furnish Form 1099-S unless
you know that any assurance on the certification is incorrect.
You must keep the certification for 4 years after the year of
sale. You may keep the certification on paper, microfilm,
microfiche, or in an electronic storage system.
You are not required to obtain the certification. However, if
you do not obtain it, you must file and furnish Form 1099-S.
2. 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 transferor, you must file Form
1099-S only for the nonexempt transferor.
An exempt volume transferor is someone who sold or
exchanged during the year, who expects to sell or exchange
during the year, or who sold or exchanged in either of the 2
previous years at least 25 separate items of reportable real
estate to at least 25 separate transferees. In addition, each
item of reportable real estate must have been held, at the
date of closing, or will be held, primarily for sale or resale to
customers in the ordinary course of a trade or business. You
are not required to report an exempt volume transferor's
transactions if you receive the penalties of perjury
certification required by Regulations section 1.6045-4(d)(3).
3. 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.
4. 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 an abandonment.
5. 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.

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.
2. 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.
For purposes of 2 above, apply the following definitions.
a. Mortgage lender means a person who lends new
funds in connection with the transaction, but only if the loan is
at least partially secured by the real estate. If there is more
than one lender, the one who lends the most new funds is the
mortgage lender. If several lenders advance equal amounts
of new funds, and no other person advances a greater
amount of new funds, the mortgage lender is the one who
has the security interest that is most senior in priority.
Amounts advanced by the transferor are not treated as new
funds.
b. Transferor's broker means the broker who contracts
with the transferor and who is compensated for the
transaction.
c. Transferee's broker means the broker who significantly
participates in the preparation of the offer to acquire the

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 unaffixed mobile home that is unrelated to
the sale or exchange of reportable real estate.

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Instructions for Form 1099-S (2013)

property or who presents such offer to the transferor. If there
is more than one such person, the transferee's broker is the
one who most significantly participates in the preparation of
the acquisition offer. If there is no such person, the one who
most significantly participates in the presentation of the offer
is the transferee's broker.
d. Transferee means the person who acquires the
greatest interest in the property. If no one acquires the
greatest interest, the transferee is the person listed first on
the ownership transfer documents.
3. 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. 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.

make a reasonable effort to contact all transferors of whom
you have knowledge. However, you may rely on the
unchallenged response of any transferor, and you need not
make additional contacts with other transferors after at least
one complete allocation is received (100% of gross
proceeds, whether or not received in a single response). If
you receive the allocation, report gross proceeds on each
Form 1099-S accordingly.
You are not required to, but you may, report gross
proceeds in accordance with an allocation received after the
closing date but before the due date of Form 1099-S (without
extensions). However, you cannot report gross proceeds in
accordance with an allocation received on or after the due
date of Form 1099-S (without extensions).
If no gross proceeds are allocated to a transferor because
no allocation or an incomplete allocation is received, you
must report the total unallocated gross proceeds on the Form
1099-S made for that transferor. If you do not receive any
allocation or you receive conflicting allocations, report on
each transferor's Form 1099-S the total unallocated gross
proceeds.
Husband and wife. If the transferors were husband and
wife at the time of closing, who held the property as joint
tenants, tenants by the entirety, tenants in common, or as
community property, treat them as a single transferor. Only
one Form 1099-S showing either of them as the transferor is
required. You need not request an allocation of gross
proceeds if husband and wife are the only transferors. But if
you receive an uncontested allocation of gross proceeds
from them, file Form 1099-S for each spouse according to
the allocation. If there are other transferors, you must make a
reasonable effort to contact either the husband or wife to
request an allocation.
Partnerships. If the property is transferred by a partnership,
file only one Form 1099-S for the partnership, not separate
Forms 1099-S for each partner.

Multiple Assets Sold

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

TIP

If real estate is sold or exchanged and other assets are sold
or exchanged in the same transaction, report the total gross
proceeds from the entire transaction on Form 1099-S.

For each transaction, be sure that only one person is
responsible for filing and that only one Form 1099-S
is filed for each transferor.

Taxpayer Identification Numbers (TINs)

You must request the transferor's TIN no later than the time
of closing. The TIN request need not be made in a separate
mailing. Rather, it may be made in person, in a mailing that
includes other items, or electronically. The transferor is
required to furnish his or her TIN and to certify that the TIN is
correct. For U.S. persons (including U.S. resident aliens),
you may request a TIN on Form W-9, Request for Taxpayer
Identification Number and Certification. Foreign persons
must provide their TIN to you on the appropriate Form W-8.
See part J in the 2013 General Instructions for Certain
Information Returns.

Employees, Agents, and Partners

If an employee, agent, or partner, acting within the scope of
such person's employment, agency, or partnership,
participates in a real estate transaction, only the employer,
principal, or partnership (not the employee, agent, or partner)
may be the reporting person. However, the participation of a
person listed on the Uniform Settlement Statement as the
settlement agent acting as an agent of another is not
attributed to the principal.

Foreign Transferors

Alternatively, you may provide a written statement to the
transferor similar to the following: “You are required by law to
provide (insert name of person responsible for filing) with
your correct taxpayer identification number. If you do not
provide (insert name of person responsible for filing) with
your correct taxpayer identification number, you may be
subject to civil or criminal penalties imposed by law.”

Sales or exchanges involving foreign transferors are
reportable on Form 1099-S. For information on the
transferee's responsibility to withhold income tax when a U.S.
real property interest is acquired from a foreign person, see
Pub. 515, Withholding of Tax on Nonresident Aliens and
Foreign Entities.

Multiple Transferors

The solicitation must contain space for the name, address,
and TIN of the transferor, and a place to certify under
penalties of perjury that the TIN furnished is the correct TIN
of the transferor. The certification must read similar to:
“Under penalties of perjury, I certify that I am a U.S. person or
U.S. resident alien and the number shown on this statement
is my correct taxpayer identification number.”

For multiple transferors of the same real estate, you must file
a separate Form 1099-S for each transferor. At or before
closing, you must request from the transferors an allocation
of the gross proceeds among the transferors. The request
and the response are not required to be in writing. You must

Instructions for Form 1099-S (2013)

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If you use a Uniform Settlement Statement, you may
provide a copy of such statement, appropriately modified to
solicit the TIN, to the transferor. Keep the Form W-9 or
substitute form in your records for 4 years.

transferor, including the stated principal amount of a note
payable to or for the benefit of the transferor and including a
note or mortgage paid off at settlement. If the transferee
assumes a liability of the transferor or takes the property
subject to a liability, such liability is treated as cash and is
includible as part of gross proceeds. For a contingent
payment transaction, include the maximum determinable
proceeds. Also see Multiple Assets Sold on page 3.

Separate Charge Prohibited

You may not charge your customers a separate fee for
complying with the Form 1099-S filing requirements.
However, you may take into account the cost of filing the
form in setting the fees you charge your customers for
services in a real estate transaction.

If you are reporting a like-kind exchange of property for
which no gross proceeds are reportable, enter 0 (zero) in
box 2 and enter an “X” in the checkbox in box 4.

Statements to Transferors

Gross proceeds do not include the value of property or
services received or to be received by, or on behalf of, the
transferor or separately stated cash received for personal
property, such as draperies, rugs, or a washer and dryer.

If you are required to file Form 1099-S, you must provide a
statement to the transferor. Furnish a copy of Form 1099-S or
an acceptable substitute statement to each transferor. For
more information about the requirement to furnish a
statement to the transferor, see part M in the 2013 General
Instructions for Certain Information Returns.

Do not reduce gross proceeds by any expenses paid by
the transferor, such as sales commissions, deed preparation,
advertising, and legal expenses. If a Uniform Settlement
Statement is used for a transfer of real estate for cash and
notes only, gross proceeds generally will be the contract
sales price shown on that statement. If other property or
services were exchanged, see the box 4 instructions, below.

You are not required to indicate on Form 1099-S that
the transferor's (seller's) financing was federally
subsidized. Also, you are not required to enter the
following:
Both total gross proceeds and the allocated gross
proceeds for a multiple transferor transaction (enter either
one or the other);
An indication that the transferor may receive property or
services for an obligation having a stated principal amount; or
An indication that, in connection with a contingent payment
transaction, the transferor may receive gross proceeds that
cannot be determined with certainty under the regulations
and is not included in gross proceeds.

TIP

Contingent payment transaction. A contingent payment
transaction is one in which the receipt, by or on behalf of the
transferor, is subject to a contingency. The maximum
determinable proceeds means the greatest amount of gross
proceeds possible if all the contingencies are satisfied. If the
maximum amount of gross proceeds cannot be determined
with certainty, the maximum determinable proceeds are the
greatest amount that can be determined with certainty.

Box 3. Address or Legal Description (Including
City, State, and ZIP Code)

Filer's Name, Address, and Telephone Number
Box

Enter the address of the property, including the city, state,
and ZIP code. If the address does not sufficiently identify the
property, also enter a legal description, such as section, lot,
and block. For timber royalties, enter “Timber royalties.” For
lump-sum timber payments, enter “Lump-sum timber
payment.”

Enter the name, address, and telephone number of the
person who is filing Form 1099-S. The name and address
must be the same as the filer information reported on Form
1096.

Transferor's Name and Address Box

Box 4. Check Here if the Transferor Received or
Will Receive Property or Services as Part of the
Consideration

Enter the name and address of the seller or other transferor
of the real estate. If a husband and wife are joint sellers, it is
only necessary to enter one name and the TIN for that person
on the form.

If the transferor received or will receive property (other than
cash and consideration treated as cash in computing gross
proceeds) or services as part of the consideration for the
property, enter an “X” in the checkbox in box 4.

Account Number

The account number is required if you have multiple
accounts for a recipient for whom you are filing more than
one Form 1099-S. Additionally, the IRS encourages you to
designate an account number for all Forms 1099-S that you
file. See part L in the 2013 General Instructions for Certain
Information Returns.

Box 5. Buyer's Part of Real Estate Tax

For a real estate transaction involving a residence, enter the
real estate tax paid in advance that is allocable to the buyer.
You do not have to report an amount as allocable to the
buyer for real estate taxes paid in arrears. You may use the
appropriate information included on the HUD-1, or
comparable form, provided at closing. For example, a
residence is sold in a county where the real estate tax is paid
annually in advance. The seller paid real estate taxes of
$1,200 for the year in which the sale took place. The sale
occurred at the end of the 9th month of the real estate tax
year. Therefore, $300 of the tax paid in advance is allocated
to the buyer, by reference to the amount of real estate tax
shown on the HUD-1 as paid by the seller in advance, and is
reported in box 5. See Notice 93-4, 1993-1 C.B. 295.

Box 1. Date of Closing

Enter the closing date. On a Uniform Settlement Statement,
the closing date is the settlement date. If a Uniform
Settlement Statement is not used, the closing date is the
earlier of the date title transfers or the date the economic
burdens and benefits of ownership shift to the transferee.

Box 2. Gross Proceeds

Enter the gross proceeds from the sale or exchange of real
estate. Gross proceeds means any cash received or to be
received for the real property by or on behalf of the

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Instructions for Form 1099-S (2013)