When you sell real estate, the IRS generally requires certain information about the transaction to be reported – and understanding this upfront avoids surprises at tax time.
Form 1099-S
Your closing or settlement agent is typically required to report the sale to the IRS via Form 1099-S, which documents the gross proceeds from the sale. You’ll receive a copy for your own tax records.
The primary residence exclusion
Many home sellers won’t owe capital gains tax at all – the IRS allows an exclusion of up to $250,000 in gain ($500,000 for married couples filing jointly) on the sale of a primary residence, provided you’ve owned and lived in the home for at least two of the last five years.
Investment and second-home sales differ
Second homes and investment properties don’t qualify for the primary residence exclusion, and gains are generally taxable – though strategies like a 1031 exchange may help investment property sellers defer taxes.
This is general information, not tax advice – always consult a CPA about your specific situation. Questions about your sale? Call Dockside Realty at 850.225.9785 or email christine@docksiderealtyinc.com.