Form 1099-S reports proceeds from a real estate transaction. A seller receiving it needs to pass it to the tax preparer along with the closing statement and the records used to calculate gain.
When the sale must be reported
You report the sale if you receive a Form 1099-S, even when the whole gain is excluded from your income, and you report it if you cannot exclude all of the gain. The IRS states both conditions on its own page about selling a home.
The two conditions, in the IRS words
Tax Topic 701, Sale of your home, last reviewed September 24, 2026, says: "If you receive an informational income-reporting document such as Form 1099-S, Proceeds From Real Estate Transactions, you must report the sale of the home even if the gain from the sale is excludable." And: "Additionally, you must report the sale of the home if you can't exclude all of your capital gain from income."
Where it goes: "Use Schedule D (Form 1040), Capital Gains and Losses and Form 8949, Sales and Other Dispositions of Capital Assets when required to report the home sale." The page sends the rest to Publication 523.
What the 1099-S is, and who sends it
It is an information return about the proceeds of a real estate transaction, and it is not the seller's job. The Instructions for Form 1099-S, revised December 2026, say: "If you are the person responsible for closing the transaction, you must file Form 1099-S." Where nobody is responsible for closing, the instructions set an order that starts with the mortgage lender, and a written designation agreement can name the filer instead. If the form is filed, the instructions also say to "furnish a copy of Form 1099-S or an acceptable substitute statement to each transferor." The transferor is you.
The certification at the closing table
There is an exception for a principal residence, and this is the paper most sellers sign without reading. The instructions describe it as the "Sale or exchange of a residence (including stock in a cooperative housing corporation) for $250,000 or less" where the closer "received an acceptable written assurance (certification) from the seller" that "the full amount of the gain on such sale is excludable from gross income under section 121."
If the certification includes an assurance that the seller is married, the instructions say the sentence is applied "by substituting $500,000 for $250,000." The seller also certifies that there has been no period of nonqualified use after December 31, 2008. And: "The certification must be signed by each seller under penalties of perjury."
Two things follow from that. The first is that signing it is a statement about your own facts, not a formality, which is a reason to read it. The second is that the exception is the closer's to use, not your right to demand: the instructions say that without a valid certification the form must be filed and furnished.
Some closers file the form on every transaction as a matter of policy, and that is allowed.
What that means in practice for a seller
Ask at closing whether the closing agent intends to issue a 1099-S. Keep your copy of whatever certification you sign, with the closing statement. If a 1099-S shows up in January, hand it to whoever prepares your return and say the sale is on it, because the form reports gross proceeds, not gain, and a return that ignores it is the one that generates a letter.
None of this changes whether you owe tax. It changes whether the sale appears on the return at all, which is a different question and the one people conflate.
Keep the certification and closing statement where they will be available for tax preparation, and pass along any Form 1099-S received afterward.
Whether your gain is excludable, what goes on your Schedule D, and what a 1099-S does to your return belong to your CPA. Whether the closing agent will take a certification belongs to the title company.
The notes on capital gains tax when you sell and on what closing costs are and who pays them cover the money either side of this, and the sellers page sets out how a listing is prepared.
Sources: IRS Tax Topic 701, Sale of your home, last reviewed September 24, 2026; and the IRS Instructions for Form 1099-S, revised December 2026, on who must file, the furnishing requirement and the principal residence exception. Read at source, October 9, 2026.
This note is general. It is not tax or legal advice. What has to be reported on your return depends on your own figures and the year the sale closes.