Question: We have a form that we are using but I can’t remember what allowed it.
It is titled “Certification For No Information Reporting On The Sale Or Exchange Of A Principal Residence”. It is used to determine if we have to report the sale to the IRS on form 1099-S, Proceeds From Real Estate Transactions.
Can you tell me any information about this form?
Answer: The form you are referring to — “Certification for No Information Reporting on the Sale or Exchange of a Principal Residence” — is a form which is to be completed by the seller of a principal residence in order to determine whether the sale or exchange needs to be reported to the IRS on Form 1099-S, “Proceeds from Real Estate Transaction”.
Generally, if the customer sells or exchanges his/their main home, a 1099-S must be completed by the person responsible for closing the real estate sale unless the sale was under $250,000 if the seller is single, or under $500,000 if married, and the two tests below are met and the closing agent obtains certification from the customer (both, if married) that they meet these tests:
Test 1. They owned and used the home as their main home for 2 years or more during the 5-year period ending on the date they sold or exchanged your home.
Test 2. They have not sold or exchanged another main home during the 2-year period ending on the date of the sale or exchange of their home.
The purpose of the Certification is to support the conclusion that the full gain on the sale is excludable from the seller’s gross income and therefore no 1099-S filing is necessary. If the certification isn’t obtained — or if the seller can’t certify because the conditions aren’t met, a 1099-S must be filed. The certification must be retained for 4 full years after the year of sale.