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
Home | About Me | Contact Me | EXIT Internet Par... | Beaufort SC Real ... | Beaufort County F... | Real Estate Training | Empty Nest? | Selling Your Home? | 27 Selling Tips | Real Estate Inves... | First Time Buyers | Expired Listings | Moving | Buyers Agent | What is a Short Sale | | (HAFA) Short Sale | Dataw Island Fees | Retirement Specialis | Best Beaufort SC ... | | Lowcountry Fish Camp | Real Estate For Sale | Beaufort County S... | Richard Neill Rea... | Office | Open Houses | Search Properties | Advanced Search | Map Search | Million Plus | Search Port Royal | Search Lady's Island | Search Fripp Island | Search St. Helena | Search Harbor Island | Search Dataw Island | Moderate priced | $200,000-$400,000 | $400,000-$600,000 | Search Beaufort City | Waterfront Homes | Search All Beaufort | Search Burton | Foreclosures | Short Sales | Historic Homes | Condos | Beach Properties | $600-One Million | Okatie | Jasper County | | South of Broad River | Sellers | Digital Marketing | Moving Help | Mar.2011 Sales | Bft. Sales Report | What to Know Befo... | Sell Your Home | Seller Mistakes! | 15 Questions to A... | 27 Free and Easy Fix-ups | Mortgage Rates | Bft SC Top to Retire | Bft. Phone Numbers | About Coffin Point | Bluffton Community | Hunting Island St... | Foreclosure Tips | Beaufort Co. Taxes | Water View of Home | Neighborhood Fees | Cat Island Community | Beaufort Activities | Harbor Island SC | Short Sale | SC Tax Information | Lands End Communi... | Buyers | Guide to Upscale ... | Featured Listings | Port Royal | Port Royal SC Lots and Land for Sale | Port Royal SC Townhomes and Condos for Sale | Port Royal SC Short Sale Properties for Sale | Port Royal SC Foreclosures for Sale | Port Royal SC Waterfront Homes for Sale | Port Royal SC Homes for Sale Under $100,000 | Port Royal SC Homes for Sale Between $100,000-$200,000 | Port Royal SC Homes for Sale Between $200,000-$300,000 | Port Royal SC Homes for Sale Between $300,000-$400,000 | Port Royal SC Homes for Sale Between $400,000-$500,000 | Port Royal SC Homes for Sale $500,000 and Over | Lady's Island | Lady's Island SC Homes Under $100,000 for Sale | Lady's Island SC Homes Between $100,000 to $200,000 for Sale | Lady's Island SC Homes Between $200,000 to $300,000 | Lady's Island SC Homes Between $300k to $400k for Sale | Lady's Island SC Homes Between $400,000 to $500,000 for Sale | Lady's Island SC Homes $500,000 and higher for Sale | Lady's Island SC Waterfront Property for Sale | Lady's Island SC REO's/Foreclosures for Sale | Lady's Island SC Short Sale Property for Sale | Lady's Island SC Condos/Townhomes for Sale | Lady's Island SC Lots and Land for Sale | St Helena Is. | St Helena Island SC Homes Under $100,000 for Sale | St Helena Island SC Homes $100,000 to $200,000 for Sale | St Helena Island Homes $200,000 to $300,000 for Sale | St Helena Island SC Homes $300,000 to $400,000 for Sale | St Helena Island Homes $400,000 to $500,000 for Sale | St Helena Island Homes $500,000 to One Million for Sale | St Helena Island SC Homes One Million and Higher for Sale | St Helena Island SC Waterfront Properties for Sale | St Helena Island SC REO's/Foreclosures for Sale | St Helena Island SC Short Sales Homes for Sale | St Helena Island Condos/Townhomes for Sale | St Helena Island SC Lots and Land for Sale | Beaufort | Beaufort SC Homes $500,000 and Up | Beaufort SC Homes for Sale $400,000 to $500,000 | Beaufort SC Homes for Sale $300,000 to $400,000 | Beaufort SC Homes for Sale $200,000 to $300,000 | Beaufort SC Homes for Sale $100,000 to $200,000 | Beaufort SC Homes for Sale Under $100,000 | Beaufort SC Lots and Land for Sale | Beaufort SC Short Sale Properties for Sale | Beaufort SC Townhomes and Condos for Sale | Beaufort SC Foreclosure Properties for Sale | Waterfront Properties for Sale in Beaufort SC | Beaufort SC Historic Homes for Sale | Beaufort SC Homes for Sale Million Plus | Blog