Form 1099-S for 1031 Exchanges: When Is Filing Required?

A 1031 exchange allows property owners to delay paying tax on gains from a qualifying property exchange. However, Form 1099-S may still need to be filed, even when no tax is due at the time of the exchange.

How Form 1099-S Applies to a 1031 Exchange

Form 1099-S is used to report certain real estate sales and exchanges. For a 1031 exchange, two things need to be checked:

• Is the real estate transfer reportable on Form 1099-S?
• Does the exchanger qualify to defer gain under Section 1031?

Section 1031 applies to qualifying exchanges of real property held for investment or for use in a business, and the exchanger reports the like-kind exchange separately on Form 8824. Form 1099-S reports the real estate transaction, while Section 1031 determines the exchanger’s federal income-tax treatment.

When Is Form 1099-S Required

Form 1099-S may be required when a 1031 exchange includes the sale or transfer of reportable real estate, such as land, a home, or a commercial building. Some real estate transactions are exempt from Form 1099-S reporting, like:

• Transfers involving corporations, governmental units, or qualifying exempt volume transferors
• Transactions such as certain gifts or bequests
• Financing or refinancing transactions
• Transactions in which total consideration can be determined with certainty to be less than $600
• Principal-residence transfers for which the required seller certification is obtained

There are two points on the $600 de minimis rule that you need to keep in mind. First, it applies to the transaction as a whole, not separately to each transferor. Second, it must not be confused with the $2,000 threshold that Public Law 119-21 applied to certain Form 1099-NEC and 1099-MISC payments for 2026.

Who Files Form 1099-S

The person responsible for closing the transaction generally files Form 1099-S.

1. Settlement agent: If a Closing Disclosure or qualifying settlement statement identifies a settlement agent, that person is responsible.
2. Closing Disclosure preparer: If no settlement agent is listed, the person who prepares the qualifying Closing Disclosure is responsible.
3. No Closing Disclosure or multiple Closing Disclosures: Responsibility passes to the transferee’s qualifying attorney, then the transferor’s qualifying attorney, and then the title or escrow company most involved in distributing the proceeds.
4. If none of the above applies: Responsibility passes to the mortgage lender, then the transferor’s broker, then the transferee’s broker, and finally the transferee.

Eligible parties may use a written designation agreement entered into at or before closing to assign filing responsibility.

Does the Qualified Intermediary File?

Not automatically. A qualified intermediary’s role in the exchange — including its control of exchange proceeds — does not, in itself, make the intermediary the Form 1099-S filer. The reporting-person hierarchy above, together with any valid designation agreement, determines who files. This distinction is a frequent source of error and is worth confirming on every exchange.

How the Exchange Is Reported on the Form

Form 1099-S records who transferred the property, when the transfer took place, and what was received in return. It also has specific reporting rules when the exchange involves property or services instead of cash, or when there are multiple transferors. The following sections explain how to report these details.

Transferor, property, and closing date

Report the actual transferor — not the qualified intermediary — and enter the property address or legal description. Request the transferor’s Taxpayer Identification Number (TIN), such as an SSN or EIN, by the closing date. In Box 1, enter the closing date; where no Closing Disclosure is used, that date is generally the earlier of when title transfers or when the economic burdens and benefits of ownership shift to the transferee.

Gross proceeds (Boxes 2a, 2b, and 2c)

For tax year 2026, gross proceeds are reported across three boxes:

Box 2a equals the sum of Boxes 2b and 2c. Cash gross proceeds can include cash, qualifying notes, and liabilities assumed by the transferee or liabilities to which the transferred property remains subject. Digital assets received as consideration are reported separately in Box 2c.

Other property or services (Box 6)

Check Box 6 when the transferor receives, or will receive, property or services other than cash, notes, or digital assets. For a like-kind exchange in which no gross proceeds are reportable — for instance, an investment property exchanged solely for qualifying replacement real estate — enter $0 in Box 2a and check Box 6.

Multiple Transferors

Generally, a separate Form 1099-S is needed for each transferor. Ask how the gross proceeds should be divided among them by the closing date. Spouses who jointly own the property may be treated as one transferor under certain conditions.However, if the proceeds are not fully divided, use the IRS allocation rules.

How Cash, Debt, and Digital Assets Affect Reporting

In a 1031 exchange, consideration goes beyond the replacement real estate, and each type is treated differently.

• Cash and notes are included, with the stated principal amount of qualifying notes, in cash gross proceeds.
• Assumed liabilities are generally treated as cash gross proceeds where the transferee assumes the transferor’s liability.
• Other property or services are generally excluded from gross proceeds, but may require Box 6 to be checked.
• Digital assets received as payment for real estate are reported in Box 2c for tax year 2026. Boxes 8a and 8b show the code and name of the digital asset received.

If a buyer takes the relinquished property subject to the seller’s $150,000 mortgage, that assumed liability will count as cash gross proceeds, even though the seller receives no $150,000 cash payment at closing.

Common Reporting Scenarios

Common Mistakes

Two common mistakes are assuming that a tax-deferred 1031 exchange does not require Form 1099-S and that the qualified intermediary is automatically responsible for filing it. Other mistakes to watch for include:

• Treating every tax-deferred 1031 exchange as exempt from Form 1099-S
• Assigning filing responsibility to the qualified intermediary by default, or reporting the intermediary instead of the actual transferor
• Bypassing the reporting-person hierarchy
• Assuming that the absence of cash means the absence of gross proceeds, and overlooking assumed liabilities
• Failing to check Box 6 when other property or services form part of the consideration
• Overlooking the 2026 digital-asset fields
• Applying the $2,000 OBBBA threshold to Form 1099-S
• Filing duplicate returns because reporting responsibility was never established

FAQs

1. Does a fully tax-deferred 1031 exchange still require Form 1099-S?

Yes. Even when no tax is due on a 1031 exchange, Form 1099-S may still need to be filed.

2. Does a qualified intermediary automatically file Form 1099-S?

No. Filing responsibility follows the reporting-person hierarchy or a valid written designation agreement.

3. What if no cash is received in the exchange?

Form 1099-S may still be required. For a like-kind exchange with no reportable gross proceeds, enter $0 in Box 2a and check Box 6.

4. Does the $2,000 reporting threshold apply to Form 1099-S?

No. Form 1099-S retains its separate exception for transactions in which total consideration is determinably less than $600.

5. When must the transferor receive the statement for a 2026 transaction?

For 2026 transactions, the transferor statement must be furnished by February 16, 2027 — the next business day after the usual February 15 date, which falls on a legal holiday in 2027.

6. Does Form 1099-S replace Form 8824?

No. Form 1099-S reports the real-estate transaction; the exchanger separately uses Form 8824 to report the like-kind exchange for federal tax purposes.

Reporting a 1031 exchange? Make sure Form 1099-S is filed correctly.

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