Form 1099-S - Proceeds From Real Estate Transactions

2017

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.

transfer under a land contract is reportable in the year in which
the parties enter into the contract.

Future Developments

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.

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

What’s New
Foreign Transferors. A new checkbox has been added as
box 5 to report the transfer of real estate by a foreign person.
Previous box 5, Buyer's Part of Real Estate Tax, is now box 6.

Reminder

In addition to these specific instructions, you should also use the
2017 General Instructions for Certain Information Returns.
Those general instructions include information about the
following topics.
Who must file (nominee/middleman).
When and where to file.
Electronic reporting requirements.
Corrected and void returns.
Statements to recipients.
Taxpayer identification numbers.
Backup withholding.
Penalties.
Other general topics.

You can get the general instructions from General
Instructions for Certain Information Returns or www.irs.gov/
form1099s.

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).
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
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, later.
Also, a transfer to a corporation that qualifies for nonrecognition
of gain under section 351 is a reportable exchange. In addition, a
Nov 15, 2016

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 added
CAUTION section 121(b)(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)(5)(C)) after December 31, 2008. Also, the sample
certification 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.

!

You may get the certification any time on or before January
31 of the year after the year of sale. You may rely on the

Cat. No. 27988X

1. If you are the person responsible for closing the
transaction, you must file Form 1099-S. If a Settlement
Statement (HUD-1) 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 HUD-1 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 HUD-1 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 HUD-1) 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.

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 transferors, 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) above, 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 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.

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 not 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, earlier.
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.

Who Must File

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.
-2-

Instructions for Form 1099-S (2017)

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.

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) under Who Must File, earlier),
the transferee's or transferor's attorney (as explained in (1)
under Who Must File, earlier), the title or escrow company that is
most significant in disbursing gross proceeds, or the mortgage
lender (as explained in (2a) under Who Must File, earlier).
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.

Spouses. If the transferors were spouses 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 spouses 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 spouse 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

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.

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 complete, non-truncated 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 may provide their TIN to you on the appropriate Form
W-8. See part J in the 2017 General Instructions for Certain
Information Returns.

Each person who signs the agreement must keep it for 4 years.
For each transaction, be sure that only one person is

TIP responsible for filing and that only one Form 1099-S is
filed for each transferor.

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 HUD-1 as the settlement agent acting as an agent of
another is not attributed to the principal.

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.”

Foreign Transferors

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.

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.”

Multiple Transferors

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 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.

If you use a HUD-1, you may provide a copy of such
statement, appropriately modified to solicit the TIN, to the
transferor. Keep the Form W-9, W-8, or substitute form in your
records for 4 years.

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.

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).
Instructions for Form 1099-S (2017)

Statements to Transferors

If you are required to file Form 1099-S, you must furnish a
statement to the transferor. Furnish a copy of Form 1099-S or an

-3-

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.

acceptable substitute statement to each transferor. For more
information about the requirement to furnish a statement to the
transferor, see part M in the 2017 General Instructions for
Certain Information Returns.

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.

You are not required to indicate on Form 1099-S that the
TIP transferor's (seller's) financing was federally subsidized.
Also, you are not required to enter the following.

Do not reduce gross proceeds by any expenses paid by the
transferor, such as sales commissions, deed preparation,
advertising, and legal expenses. If a HUD-1 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,
later.

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.
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.

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.

Truncating transferor's TIN on payee statements. Pursuant
to Treasury Regulations section 301.6109-4, all filers of this form
may truncate a transferor’s TIN (social security number (SSN),
individual taxpayer identification number (ITIN), adoption
taxpayer identification number (ATIN), or employer identification
number (EIN)) on payee statements. Truncation is not allowed
on any documents the filer files with the IRS. A filer’s TIN may
not be truncated on any form. See part J in the 2017 General
Instructions for Certain Information Returns.

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.”

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, 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.

Enter the name and address of the seller or other transferor of
the real estate. If spouses 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 2017
General Instructions for Certain Information Returns.

Box 5. Check Here if the Transferor is a Foreign
Person (nonresident alien, foreign partnership,
foreign estate, or foreign trust)

If the transferor is a foreign person (nonresident alien, foreign
partnership, foreign estate, or foreign trust), enter an "X" in the
checkbox in box 5.

Box 1. Date of Closing

Enter the closing date. On a HUD-1, the closing date is the
settlement date. If a HUD-1 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 6. 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 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 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, earlier.

-4-

Instructions for Form 1099-S (2017)