The other experts have not addressed the “1099-S exemption certificate.“ This is your opportunity to certify to the closing agent that you are exempt from capital gains tax and that therefore, the closing agent is not required to issue the 1099-S.
(The IRS requires that a 1099S be issued unless the seller meets certain qualifications. The certificate is used by the closing agent to record your information claiming exemption, that they keep on file in their records in case they are audited by the IRS for failing to issue 1099s.)
Since you are not exempt from capital gains tax on the sale of this house, you simply don’t fill out the exemption certificate. (Alternatively, answer "False" to question 1, "I used the home as my principal residence" and leave the other answers blank.) The closing agent will issue a 1099-S at the closing.
