What is Form 1099-S?
The closing agent, title company, or real estate attorney sends a 1099-S when you sell real property. It reports gross proceeds from the sale. The taxable gain depends on your cost basis and whether the IRC Section 121 primary residence exclusion applies.
SupportedKey Boxes
| Box | Description | Where it flows |
|---|---|---|
| Box 1 | Date of closing | Informational |
| Box 2 | Gross proceeds | Capital gain computation |
| Box 3 | Property address/description | Informational |
| Box 5 | Buyer pays real estate tax | Informational |
How PaisaTax Handles It
- Upload or manual add — one slot per property sold
- Preparer inputs: Cost basis and IRC Section 121 exclusion amount
- Capital gain = Gross proceeds (Box 2) - Cost basis - Section 121 exclusion
- Section 121 exclusion: Up to $250,000 (Single) or $500,000 (MFJ) for a primary residence owned and used for 2 of the last 5 years
- Data flow: The net gain flows to Schedule D Line 12 as a long-term capital gain
Common Situations
- Primary residence sale with gain under exclusion: If the gain is less than $250K/$500K and the residence test is met, no taxable gain. Nothing appears on the return.
- Investment property sale: No Section 121 exclusion available. Full gain is taxable. May involve unrecaptured Section 1250 gain (25% rate) on depreciation.
- Partial exclusion: If the seller lived in the home less than 2 years due to employment change, health reasons, or unforeseen circumstances, a partial exclusion may apply.
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Tip
The Section 121 exclusion only applies to a primary residence. Rental properties, vacation homes, and investment properties do not qualify.