Activities of Real Estate Professionals

Real estate professionals, including employees, agents, and partners, may participate in real estate transactions, but reporting responsibilities for Form 1099-S are assigned to the employer, principal, or partnership—not to the individual acting in an employment, agency, or partnership capacity. This rule ensures that only the entity responsible for closing the transaction is required to file the form. However, if a person is listed on the Closing Disclosure as a settlement agent acting as an agent of another, their participation is not attributed to the principal for reporting purposes.

Who Must File Form 1099-S

• The person responsible for closing the transaction is generally required to file Form 1099-S. If a Closing Disclosure is used, the settlement agent listed on it is considered responsible.
• If no Closing Disclosure is used, the person responsible is determined in order of priority: transferee’s attorney, transferor’s attorney, or the disbursing title or escrow company.
• If no one is responsible for closing, the filing responsibility falls in this order: mortgage lender, transferor’s broker, transferee’s broker, or transferee.
• Parties may designate a specific person to file via a written agreement signed by all parties involved.

Reportable Real Estate Transactions

• Transactions involving the sale or exchange of ownership interests in real estate (e.g., land, buildings, condominiums, cooperative housing stock, standing timber) are generally reportable.
• Reportable transactions include exchanges for money, indebtedness, property, or services.

Exceptions to Reporting

• Sales of a principal residence for $250,000 or less (or $500,000 for married couples) may be exempt if the seller provides a written certification under penalties of perjury that the gain is fully excludable under section 121.
• Transactions involving corporations, governmental units, or exempt volume transferors are not reportable.
• De minimis transfers (less than $600 total consideration) are exempt from reporting.
• Transfers not involving a sale or exchange (e.g., gifts, bequests, foreclosures) are not reportable.
• Transfers of mobile homes not affixed to a foundation are exempt if unrelated to reportable real estate.

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Disclaimer: Always verify details with current Federal or State Department of Revenue Forms and Instructions. Tax rules may vary based on individual circumstances. For complex situations, consult a CPA or tax attorney.