Taxes are never a fun subject to talk about, since they’re often unnecessarily complicated and generally end with you having less money in your pocket. To add to the complexity of filing taxes, the IRS requires that you report not only your standard income, but also certain miscellaneous earnings, such as the profit you make if you sell your house.
Yes, if you sell any real property, the IRS will want to know about it through the 1099-S tax form. But there’s good news! If you use a title company to close on your property, they will file the 1099-S form for you. Just don’t forget to tell your accountant that you sold a property come tax season!
That being said, it’s important that you provide the title company with all of the information they need to properly file your 1099-S form, such as your tax ID and social security number. Failure to do so will not only keep the title company from being able to provide the IRS with correct information about the sale of your property—you could be subject to civil or criminal penalties for failure to provide the information.
Your 1099-S amount reported is the gross proceeds of the sale, not your net proceeds. Gross proceeds include cash received, notes payable to the seller, and any liabilities of the seller assumed by the buyer. Gross proceeds don’t include separately stated cash received for personal property.
It should be noted that if the sale is your primary residence, the transaction may not be reportable depending on certain circumstances, but always ask your tax professional.
At Title Junction we care about helping you stay informed throughout your real estate transaction. Have questions? Give us a call at 239.415.6574.
In case you missed it, check out our last Title Junction post: The Basics of Intellectual Property