New Rules: Rental Property Owners Must File 1099s

If you own rental property, you will have to start issuing 1099s to anyone providing services in 2011.   The new rules are contained in the Small Business Jobs Act (PL 111-240) and are similar to the existing reporting requirements for those engaged in a trade or business.

Payments of  more than $600 made during 2011 for services  in connection with your rental property must be reported on  Form 1099-MISC to the service providers and the IRS.  The report for 2011 payments is due in January 2012.

Payments you make for gardening, pool service, cleaning, accounting, painting or repairs are  examples of the type of services  included. 

You will not have to report payments made to an incorporated business in 2011.  But as it stands now,  payments to corporations starting in 2012  must be reported also.


Example:  You pay $200 to  Joe's Handyman Services (an unincorporated business)  for repairs at one of your rental properties  in January 2011.   You pay Joe an additional  $500 for painting at a second rental property in July 2011.  In January 2012, you will need to send Joe a 1099-MISC showing the total $700 paid in 2011 as miscellaneous income.  Copy is also filed with the IRS.  If you pay Joe for additional work done at your house (personal residence), payment for that work would not be included as it is not performed in connection with the rental property.

To be able to report the information,  you will need to have the service provider's name, address and social security number.  IRS Form W-9 can be used for this purpose (see below).

To have all the information you need when the time comes to file, you should start collecting it as you hire and pay someone.  It may be difficult to track down the people and obtain the information at the end of the year.  Also you won't know in advance how much a service provider will be paid for the year and whether the $600 threshold is exceeded.

Please let me know if you have any questions.

New Rules Require Rental Property Owners to Issue 1099s

http://www.irs.gov/pub/irs-pdf/fw9.pdf