Rental Property, 1099-Misc for expenses

[SunTaxMan]

Congress keeps us all in limbo - sometimes.

I have a client with one rental property and I am trying to remember if 1099-Misc needs to be issued for repair, etc. work done on that property.

It seems like I remember that the requirement for 1099 for service related to rental property WAS in effect, then was DELETED from the regulations.

Client is NOT "in the business" of renting property - just one property.

The guideline of being incorporated is superceded by the involvement with rental property, rather then being "in business."

Correct?

Thanks.

[Guest Taxed]

I have several rental clients with multi family units that use the services of "handyman" to do various repair and maintenance jobs at the properties. I have advised them to issue 1099-Misc to the handyman. For other repairs like plumbers, electricians etc. my advise is pay with a credit/debit card.

On sch E if you answer "active participation" they are in the business of renting property. There may not be realestate professional in which case it will be Sch C instead of E.

[SunTaxMan]

Taxed,

Thanks for your response and the information. but....you didn't answer the question - did you? You advised what you do, but not why - nor whether the 1099-Misc you are preparing are required. -- especially since you are dealing with clients who have multi-family units. This would seem to be clients (with 3 or more properties) who qualify as being "in the business" of rentals - not a taxpayer with a single rental property. And it seems to me I remember that taxpayers with 3 or more properties qualify as "being in the business of rentals" and should be filling Schedule C, not E. No?

[Guest Taxed]

Unless someone corrects me, I am not aware of an exception to the requirement of issuing a 1099-Misc if 600 or more is paid to a 'handyman" type individual for repair and maintenance work. I have a client who owns a small strip mall and they send a 1099-Misc box 7 filled for the landscaper and snowremoval service. We have been doing this for years.

My clients do not qualify as a realestate professional because most of their income is derived from non rental activity. They just happen to own those triple deckers(multi family units).

[jainen]

>>the requirement for 1099 for service related to rental property WAS in effect, then was DELETED from the regulations<<

In 2010 Congress defined rental property as a business for 1099's. The next year, they repealed that definition. Now nobody knows for sure, so AICPA wrote to IRS in January for guidance. Meanwhile, questions A & B remain on Schedule E, and the Instructions for Form 1099-misc still say, "You are engaged in a trade or business if you operate for gain or profit."

Just file the dang thing! What's the big deal? It will help audit-proof the return, unless you want to argue that you aren't trying to make a profit.

[SunTaxMan]

Jainen,

Thanks for your response. Your perspective is like mine. I would rather file the form than risk the IRS' ire. I was hoping for specific information. After seeing your response, I remembered seeing those specifics and agree with you. Thanks.

[OldJack]

Well.... the big deal is that once you file a 1099 the IRS computer will be looking for you to file 1099s every year.

[joanmcq]

Btw, real estate professionals do not file a Sch C for their rentals. The designation simply makes the rentals on their Sch E non passive.

[kcjenkins]

. And it seems to me I remember that taxpayers with 3 or more properties qualify as "being in the business of rentals" and should be filling Schedule C, not E. No?

NO. Being in the business of rentals still means filing an E. Just means it's non-passive, not that it's Sch C.