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The basics:

Use IRS Form 1099-S Proceeds From Real Estate Transactions to report proceeds from real estate transactions. How the property is used (personal, investment, business) will determine where the information is reported

Follow the steps below to report real estate for personal, investment, or business use.

For more information, see the IRS Instructions for Form 1099-S.

Reporting real estate for personal use:

If the 1099-S was for the sale of your main home, complete the sale of home questions under the investment income topic in our program to see if any amounts are taxable.

  1. From within your TaxAct® return (Online or Desktop) click Federal. On smaller devices, click in the upper left-hand corner, then select Federal.
  2. Click Investment Income in the Federal Quick Q&A Topics menu to expand the category and then click Gain or loss on sale of investments.
  3. Click Sale of your main home
  4. The program will proceed with the interview questions for you to enter or review the appropriate information

Check the box indicating you received a Form 1099-S so the transaction is transferred to the applicable forms/schedules within your return. 

If you incurred a loss on the sale of your main home:

The IRS doesn't allow you to deduct a loss from personal-use property. If you checked the box next to Check here if you received a Form 1099-S, the sale of home transaction will be reported on Form 8949 and Schedule D. TaxAct will automatically adjust the loss to zero (0) using Adjustment Code L.

Don't report the sale of your main home on your tax return unless your gain exceeds your exclusion amount. Refer to IRS Publication 523 Selling Your Home for information on the sale of your home, the ownership and use tests, and the exclusion amount.

Reporting a timeshare or vacation home (personal capital asset):

If the 1099-S was for a timeshare or vacation home, it's considered a personal capital asset to you and the sale is reportable on Federal Form 8949 and Schedule D.

A gain on this sale is reportable income. The IRS doesn’t allow you to deduct a loss since it’s personal-use property. The same would be true for inherited property if it’s a personal capital asset. Select Adjustment Code L so the loss is disallowed on the return.

If an inherited property is considered an investment property:

In this case, the capital gain or loss is reported on Form 8949 and Schedule D, and the loss is allowed. See reporting real estate for investment use below.

To report proceeds for property considered to be a personal capital asset:

  1. From within your TaxAct return (Online or Desktop) click Federal. On smaller devices, click in the upper left-hand corner, then select Federal.
  2. Click Investment Income in the Federal Quick Q&A Topics menu to expand the category and then click Gain or loss on sale of investments
  3. Click Capital Gain or Loss (Form 1099-B) in the Federal Quick Q&A Topics menu.
  4. Click +Add Form 1099-B to create a new copy of the form or click Review to review a form already created 
  5. The program will proceed with the interview questions for you to enter or review the appropriate information

Generally, your basis in property you inherited from a decedent is the fair market value at the date of the person's death. For more information, refer to IRS Publication 551 Basis of Assets.

Reporting real estate for investment use:

If the 1099-S was for investment property (or inherited property considered investment property), the sale is reportable on federal Schedule D:

  1. From within your TaxAct return (Online or Desktop) click Federal. On smaller devices, click in the upper left-hand corner, then select Federal.
  2. Click Investment Income in the Federal Quick Q&A Topics menu to expand the category and then click Gain or loss on sale of investments.
  3. Click Capital Gain or Loss (Form 1099-B).
  4. Click +Add Form 1099-B to create a new copy of the form or click Review to review a form already created
  5. The program will proceed with the interview questions for you to enter or review the appropriate information

Reporting real estate for business or rental use:

If the 1099-S was for the sale of business or rental property, then it's reportable on IRS Form 4797 and Schedule D:

  1. From within your TaxAct return (Online or Desktop) click Federal. On smaller devices, click in the upper left-hand corner, then select Federal.
  2. Click Business income in the Federal Quick Q&A Topics menu to expand the category. Click Business income or loss from a sole proprietorship or Rent and Royalty Income 
  3. The program will proceed with the interview questions for you to enter or review the appropriate information

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