A few things to clarify here first.
"this is not a ‘business’ for us"
Yes it is a business. But since that business produces passive income it's reported on SCH E instead of SCH C. That's the difference.
"Am I required to issue a 1099 for the work?"
If you paid an "INDIVIDUAL" to do the work, then the 1099-MISC is required. Otherwise, if the individual is self-employed and you paid their business to do the work, no 1099-MISC is required.
Now just to help out in case it's necessary, and it may not be:
"$26,000 for renovations, including materials."
At that price, this sounds like a property improvement that needs to be capitalized and depreciated over time. This would be entered in the assets/depreciation section and since it will include the amount you paid the contractor, if you issue a 1099-MISC for this, then that 1099-MISC amount you paid is *NOT* a deductible rental expense anywhere. It's included in your capitalization costs.
RENTAL POPERTY ASSETS,
MAINTENANCE/CLEANING/REPAIRS DEFINED
Property Improvement.
Property improvements
are expenses you incur that add value to the property. Expenses for this are
entered in the Assets/Depreciation section and depreciated over time. Property
improvements can be done at any time after your initial purchase of the
property. It does not matter if it was your residence or a rental at the time
of the improvement. It still adds value to the property.
To be classified as a
property improvement, two criteria must be met:
1) The improvement
must become "a material part of" the property. For example,
remodeling the bathroom, new cabinets or appliances in the kitchen. New carpet.
Replacing that old Central Air unit.
2) The improvement
must add "real" value to the property. In other words, when the property is appraised by a qualified,
certified, licensed property appraiser, he will appraise it at a higher value,
than he would have without the improvements.
Cleaning & Maintenance
Those expenses
incurred to maintain the rental property and it's assets in the useable
condition the property and/or asset was designed and intended for. Routine
cleaning and maintenance expenses are only deductible if they are incurred
while the property is classified as a rental. Cleaning and maintenance expenses
incurred in the process of preparing the property for rent are not deductible.
Repair
Those expenses
incurred to return the property or it's assets to the same useable condition
they were in, prior to the event that caused the property or asset to be
unusable. Repair expenses incurred are only deductible if incurred while the
property is classified as a rental. Repair costs incurred in the process of
preparing the property for rent are not deductible.
Additional clarifications: Painting a room does not qualify as a
property improvement. While the paint does become “a material part of” the
property, from the perspective of a property appraiser, it doesn’t add “real
value” to the property.
However, when you do
something like convert the garage into a 3rd bedroom for example,
making a 2 bedroom house into a 3
bedroom house adds “real value”. Of course, when you convert the garage to a
bedroom, you’re going to paint it. But you will include the cost of painting as
a part of the property improvement – not an expense separate from it.
