If you sell a property you own, then you will need to file a 1099-S form for tax purposes. According to REtipster, this form is part of the closing process and reports your profits from the sale.
The IRS requires you to file a 1099-S form to ensure you pay all applicable taxes on the transaction. In some cases, the buyer will have to file this form, not you.
If you are selling, there may be a clause in the contract requiring you to file the 1099-S. Even if there is not a clause, it is usually easier for you to file it because you have all the required information at hand. It can be more difficult for the buyer to file since they do not have access.
You only have to file the form one time for a property, so it is not much of a hassle. It usually is part of the closing process, and the title company may even handle it for you.
There are a few situations in which you will not have to file a 1099-S for real estate transactions. First, if you are a government agency or corporation selling the property, then you do not need to file the form. Second, if the money that exchanges hands is under $600, you also do not have to file. Lastly, if the price of the property is under $250,000, then no 1099-S is mandatory.
It is essential to file the 1099-S if the law requires you to do so. Failing to file can bring about some tax problems for you when you go to file at the end of the tax year.