I was a cosigner on a home loan which sold last year. I received a Form 1099S but I did not receive any of the proceeds from the sale. How do I handle this my taxes?

[DianeW]

If the proceeds do not belong to you and all of the proceeds went to the first signer of the home loan you can choose to nominee the proceeds to the signer/owner of the home.  You may want to check with the payer to see why you were issued a document.

• Nominee returns. Generally, if you receive a Form 1099 for amounts that actually belong to another person or entity, you are considered a nominee recipient. You must file a Form 1099 with the IRS (the same type of Form 1099 you received).  You must also furnish a Form 1099 to each of the other owners. File the new Form 1099 with Form 1096 (this is a transmittal for the 1099) by mailing to the Internal Revenue Service Center for your area.
  
• On each new Form 1099, list yourself as the payer and the other owner as the recipient. On Form 1096, list yourself as the nominee filer, not the original payer.  The nominee is responsible for filing the subsequent Forms 1099 to show the amount allocable to each owner.
• The forms filed with the IRS should be the red copy so if you don't have a color printer, go to the IRS website and order the forms here:  Click here to order forms or publications from the IRS.

Keep all records with your return for future verification if necessary.

[bceick]

The title company said I was issued a 1099-s because I did not live in the home. It was my daughters house, I had to co-sign the mortgage for her to purchase the home.  I did not contribute any money toward the home, nor did I profit in any way.  100% of the proceeds were wired in her name to her bank account of which she is the sole owner.  So issuing her a 1099 corrects any percieved tax obligation on my part?

[DianeW]

Yes.  There should only be one 1099-S issued to the owner of the home.

[bumblbee711]

I had the same situation this year.  I had cosigned and the mortgage company put my name on the deed.  My daughter received all proceeds as that was her primary residence and she paid the mortgage.  The only caveat is that we are both on the deed.  So if I received $0 proceeds from the sale, I should not have to report this sale.

[DawnC]

You need to determine what income there is to report, and then determine who has to report that income between you and the other owners.   The 1099-S must be reported as the IRS has received a copy.   You could try to get a corrected copy from the closing attorney.

The property has a cost basis.   The reportable capital gain is the difference between what the property sold for and that cost basis.   When you enter the sale in the Investment Income section, you will be able to enter an adjustment for the proceeds.   There will be a question that asks if any of these situations exist with the reporting of this sale.   In the list, you can select 'Some or all of these proceeds do not apply to me'.   TurboTax will enter a code for a nominee adjustment to the gain or loss on Form 8949.

Where do I enter the sale of a second home/investment property sale on 1099-S?   

[bumblbee711]

Dawn 

  thank you for your reply as I would have never thought of entering the home sale as a second home.  The only issue I have is I am not able to enter the value of "N" for Nominee as there is no override feature.  This would be a nice to have feature in the future for these type of home sale situations.  Do you have a suggestion as to how I could enter the "N" for Nominee as there was no question for this list so I had to go to the "forms" and try to enter it manually.  thanks!

[AbrahamT]

Here's what your going to do.

Go into the 8949 form mode.

then;  in the adjustments column , you'll enter a figure either positive or negative to zero out whatever gain or loss resulted from the activity of the sale of the house.

For example, if you had a gain of 150,000, you would enter -150,000 in the adjustment column. If you had a loss from the activity of the sale of the house of -150,000, you would then enter 150,000 in the adjustment column as a positive number to zero out the activity because you are only a nominee in essence.

Then In the code column, you would identify this with the letter n

See here

 

This will seamlessly  zero itself out on the Sch D like this

 

For a more detailed step by step description on how to handle this situation, see HERE