Sellers of real property will have certain information regarding the sale reported to the Internal Revenue Service.
This required reporting is a consequence of the Tax Reform Act of 1986; it is intended to encourage taxpayer compliance and aid in audit and enforcement efforts by the I.R.S.
To help you better understand this subject, the Land Title Association has answered some of the questions most commonly asked about Required Reporting 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.
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:
Currently, typical homeowner transactions covered include sales and exchanges of 1-4 family residential properties such as houses, townhouses, and condominiums. Also reportable are sales or exchanges of improved or unimproved land, commercial or industrial buildings, condominiums, stock in a cooperative housing corporation and mobile homes (manufactured homes) affixed to real property.
Specifically excluded from reporting are foreclosures and abandonment of real property and financing or refinancing of properties.
The settlement agent is required to request the transferor’s taxpayer identification number(s) (TIN(s)) before the time of closing. You may request a TIN on Form W-9 or use an alternative written request. The IRS has included sample wording of an alternative written request in the instructions for preparation of Form 1099S.
Should the seller fail to provide the identification number and certify its correctness, the settlement agent may choose to:
Multiple sellers may allocate the gross proceeds among themselves for purposes of reporting. If there is no allocation, an incomplete allocation or conflicting allocations, then the entire gross proceeds will be reported for each seller.
The I.R.S. provides free publications that explain the tax aspects of real estate transactions. You may wish to order:
To place your order, phone toll-free (800) 829-3676.
Article by CLTABack to Table of Contents
DON'T MISS A NEW LISTING AGAIN!
FREE AUTOMATED EMAIL UPDATES
Barbara Jenness, ABR, e-PRO, GRI, TRC is a proud member of the ActiveRain Real Estate Network, a free online community to help real estate professionals grow their business.
My real estate in St. Augustine
Barbara B. Jenness, P.A.
Promote Your Page Too
Providing a superior level of informed, professional real estate services to buyers and sellers in the coastal areas of Northeast Florida including St. Johns County
(Ponte Vedra, St. Augustine, St. Augustine Beach, Vilano Beach, Porpoise Point, Crescent Beach), Duval County (Jacksonville Beach, Atlantic Beach, Neptune Beach), golf course & gated communities (Turtle Shores, Marsh Creek, Palencia & World Golf Village), the St. Johns River areas of Fruit Cove, Mandarin, Orangedale, & Palatka including foreclosures.
Barbara B. Jenness, P.A., Licensed Real Estate Broker
Materials and images on this website MAY NOT BE COPIED without my permission.
Copyright 2019 Northeast Florida Multiple Listing Service, Inc. All rights reserved. The data relating to real estate for sale on this web site comes in part from the Internet Data Exchange (IDX) program of the Northeast Florida Multiple Listing Service, Inc. Real estate listings held by brokerage firms other than Barbara B. Jenness, P.A. are marked with the listing brokers name and detailed information about such listings includes the name of the listing brokers. Data provided is deemed reliable but is not guaranteed. Barbara B. Jenness, P.A. does not display the entire Northeast Florida Multiple Listing Service, Inc. data exchange program database on this web site. The listings of some real estate brokerage firms have been excluded. Last updated on 2019-05-19.
Any use of search facilities of data on the site, other than by a consumer looking to buy, sell or lease real estate is prohibited. Based on information from Northeast Florida Multiple Listing Service, Inc that was updated on 2019-05-19. The Corporation does not guarantee and is not in any way responsible for, its accuracy. Data maintained by Northeast Florida Multiple Listing Service, Inc. does not reflect all real estate activity in the market.