1099 IRS Paperwork Relief For Las Vegas Landlords

On April 14, President Obama signed a law that removes the expanded “1099” reporting requirement from the Affordable Care Act, which would have required landlords to send 1099 forms for all purchases of goods and services over $600 annually.

From The National Association of Realtors:

The provision required even the smallest property owners — those who might just be renting out a second home or other rental property — to track any work done for them that totals $600 a year or more over the course of a year and to send any vendors whose work reaches that amount an IRS Form 1099, so they can report the income to the federal government.

Common Questions, Answers and Debate:

John Trelease says:
April 14, 2011 at 8:41 am
Am I missing something? Hasn’t reporting income and expenses been part of the tax filing process for a long time? Filing taxes and using form 1099 to report the earning threshold of $600 income paid has be part of owning a business, whether large or small. Am I still missing something?

Ann Carlson says:
April 15, 2011 at 9:01 am
I would like a better understanding of small property owner. I have a small complex of 6 one bdrm units, my son has 2 duplexes and a 10 unit complex. Are we both small property owners or am I and he isn’t or are we both or neither of us are. I don’t know where to draw the line. I work for a man that has 135 rentals I can tell he’s big. Your help would be appreciated. I use Home Depot for most of my expenditures on my property but they are incorporated so one doesn’t have to send them a 1099, right?

I pay an independent painter over $600 he would get one right? Unless of course, I am exempt because I”m small.

Curt Schreiber says:
April 15, 2011 at 11:05 am
A couple of things to think about.

This requirement that was repealed could conceivably have required owners of a rental condo to send the HOA management company a 1099 for their “service” of running the HOA. Does a landlord pay for some of the utilities on a rental property? Then a 1099 might have been required to a city or public utility for the electric “service”, water “service”, or sewer “service”. How dumb and a waste of time is that?

More importantly, if you send out a 1099-Misc to someone who did work for you, like say, a painter, roofer, landscaper, etc. and you are not incorporated with regard to the rental property, guess who’s Name, Address and SOCIAL SECURITY NUMBER goes on the 1099. Yup, its yours! I’m looking at the form right now. Now, don’t we all just want to give that information to every Tom, Dick and Harry who happens to do work on a rental property for us?(No offense intended to anyone who’s name is Tom, Dick or Harry) We might be OK with the guy getting up on the roof to fix a leak or wind-damaged shingles but do we want to trust them with our personal information? How do we know they won’t just toss it in the trash dumpster for the apartment complex they might live in? For anyone to find. It seems like an open door to the risk of identity theft to me.

This was an ill-conceived law from an over-reaching congress that needed to be repealed.

Robert Freedman says:
April 15, 2011 at 8:36 am
Thanks for everyone’s comments. I’d like to respond specifically to the comment by John Trelease, who makes the point that the $600 Form 1099 reporting requirement has been around for some time, so what was the change all about?

What the law would have changed (and I should note that President Obama signed the repeal yesterday, so it’s now officially gone) is who it applies to. Under the just-repealed provision, anyone who has a rental property, even those who aren’t in the business or trade of rental real estate, would have had to keep records of vendor expenses and send the 1099 Form to all vendors doing at least $600 a year in work. So, now that that requirement is repealed, existing 1099 reporting requirements apply. So, only property owners who are in the business or trade of rental real estate must meet the reporting requirement. People who are renting out a second home or other property, including those who work with a real estate professional to help them manage the property, but aren’t in the business of rental real estate, don’t have to keep the 1099 records.

That expansion of the reporting requirement was part of small business legislation that passed last year. There was also a sister provision in the health care reform law that also passed last year. That sister provision has also been repealed, but it was a little different. It required all businesses (we’re not just talking rental owners) to track all vendor work, including vendors who are incorporated businesses. Prior to that change, businesses only had to track payments to independent, unincorporated vendors. The thinking was that incorporated businesses already have a way to systematically account for all of their income and didn’t need the 1099 Form. In any case, both provisions are now repealed.
—Robert Freedman

Keep in mind that hiring a professional property management company to take care of your Las Vegas rentals also includes paperwork, vendor relations and accurate accounting practices.

Please feel free to contact Shelter Realty’s Las Vegas Property Management Division if you have any questions, or would like a referral to a CPA who specializes in rental income properties.

Phone: (702) 376-7379