I did a one-off house flip (not a dealer) and owned the property just over one year. Do I need to send a 1099-NEC to contractors I paid more than $600?

Forum|Forum|3 years ago
January 29, 2023
2 replies
15 views

I bought it in 2021 and sold it in 2022 for a profit. I assume it will be taxed as capital gains and not ordinary income since it's a one-off flip. During renovations I paid four different contractors over $600 each. I have the SSNs for 3 of them...but am I even required to send any 1099-NECs for an investment property that wasn't a rental and I'm not a dealer? The house was never rented or lived in, just renovated and held for slightly over one year.

TurboTax Online

DavidD66

Level 15

Yes. According to the IRS you are required to send a Form 1099-NEC to contractors you paid $600 or more "... when payments are made in the course of your trade or business... .You are engaged in a trade or business if you operate for gain or profit." Buying a house to flip would qualify as operating for gain or profit.

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ACtaxpayerAuthor

Level 2

Thanks so much--that's really helpful. Now I just need to figure out what to do for the one contractor who didn't give me his SSN#...he knew I might need it (I told him last year) but now he isn't replying to my emails. 😞

pk_

Level 15

@ACtaxpayer , having read through original post and agreeing with the comments/answers by @DavidD66 , just wanted to point out that gains are ONLY given capital treatment if , and only if , the underlying asset was held / owned for ONE YEAR or longer. I hope you have had at least 365 days between the two closings ( buying and selling ). Else the gain will be treated short-term and taxed as ordinary income.