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.<\/p>\n
Form 1099-S is used to report certain real estate sales and exchanges. For a 1031 exchange, two things need to be checked:<\/p>\n
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.<\/p>\n
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:<\/p>\n
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.<\/p>\n
The person responsible for closing the transaction generally files Form 1099-S.<\/p>\n
Eligible parties may use a written designation agreement entered into at or before closing to assign filing responsibility.<\/p>\n
Not automatically. A qualified intermediary’s role in the exchange \u2014 including its control of exchange proceeds \u2014 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.<\/p>\n
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.<\/p>\n
Report the actual transferor \u2014 not the qualified intermediary \u2014 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.<\/p>\n
For tax year 2026, gross proceeds are reported across three boxes:<\/p>\n
Box<\/strong><\/th>\n| What It Reports<\/strong><\/th>\n<\/tr>\n | 2a<\/td>\n | Total gross proceeds<\/td>\n<\/tr>\n | 2b<\/td>\n | Total cash gross proceeds<\/td>\n<\/tr>\n | 2c<\/td>\n | Digital asset gross proceeds<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n | 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.<\/p>\n Other property or services (Box 6)<\/h4>\nCheck 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 \u2014 for instance, an investment property exchanged solely for qualifying replacement real estate \u2014 enter $0 in Box 2a and check Box 6.<\/p>\n Multiple Transferors<\/h4>\nGenerally, 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.<\/p>\n How Cash, Debt, and Digital Assets Affect Reporting<\/h2>\nIn a 1031 exchange, consideration goes beyond the replacement real estate, and each type is treated differently.<\/p>\n
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