Do I need to issue 1099-MISC to my investment rental property manager?

[leokpoon]

Thank you for answering all these questions.   For year 2020, in turbo tax, it is asking me (a property owner) for a 1099-NEC for property expenses.  I hire a property manager and he has already sent me a 1099-MISC this year.  My question is,  does he also need to send me a 1099-NEC form as well?   Basically,  he has been collecting rent and disburses the money to me after subtracting any fee.  Or am I suppose to send my property manager a 1099-NEC since I am paying him for his service? 

[Michele G]

You need to send him a W-9 to find out.  If it is filled out that he is an individual sole proprietor/contractor, then yes, you need to issue a 1099NEC to him for his paid services.  If it is returned to you with either S-Corp or C-Corp checked, then you do not need to issue a 1099.  Remember to check with your state DOR to find out their requirements for 1099 filings as well.

[JamesG1]

@leokpoon

2020 Instructions for 1099-Misc specifically responds to both of your questions. 

Your property manager reports rent paid to you on form 1099-Misc not 1099-Nec. 

You are not required to issue your property manager a 1099-Misc.

Trade or business reporting only.

Report on Form 1099-MISC only when payments are made in the course of your trade or business. Personal payments are not reportable. You are engaged in a trade or business if you operate for gain or profit.

Exceptions.

Some payments do not have to be reported on Form 1099-MISC, although they may be taxable to the recipient. Payments for which a Form 1099-MISC is not required include all of the following.

• Generally, payments to a corporation (including a limited liability company (LLC) that is treated as a C or S corporation). However, see Reportable payments to corporations, later.
• Payments for merchandise, telegrams, telephone, freight, storage, and similar items.
• Payments of rent to real estate agents or property managers. However, the real estate agent or property manager must use Form 1099-MISC to report the rent paid over to the property owner. See Regulations sections 1.6041-3(d), 1.6041-1(e)(5), Example 5, and the instructions for box 1.

[jmoose]

I manage 2  vacation rentals for others. I sent out a 1099-Misc to each for the rentals income that I collected on my website and then paid to them. The remainder of their rental income was deposited directly into their accounts from the listing sites. Where do I put the rental income I collected on their behalf on my business- as rental income? Where do I put the payments I gave them (just expenses?) Is there a way to import the 1099-NEC and 1099-misc forms I created and efiled on Quick Employer forms? They sent me a 1099-NEC me for my management fees.

[ThomasM125]

You could report the income as rental income, and then report the payment to the owner as rental expense. You would effectively be renting the property from the owner, and then renting out to the tenants.

The only exception to this would be if you are in the business of renting properties, then it would not be a rental activity for you, and you would report the income as service income and the expenses as commission or some similar expense. In this case, it would be self-employment income.

There is no way to import the 1099 forms, you will have to enter them manually in TurboTax.

[Edited 2/26/21 8:50 PM PST]

@jmoose

[slacorte]

My property manager is a franchise with Coldwell Bank. They issued a 1099-MISC form to me that reported the rental income received from our tenant. Each month they issue me a report that shows a receipt of rent received from the tenant, and the management fee paid to them. Also, when they schedule/perform maintenance on the property they include it in the report and reduce my draw. I sent them today a W-9 form and asked to fill it out and return it. If they are not a corporation, Do I need to send a 1099-NEC form to the IPS and property manager? And if so, do I include both the management fee and maintenance expenses in the 'Non Employee Compensation' box, or is only the management fee reported? The management fee is over $1700. Thanks for your help!

[JeffreyR77]

The franchise of Coldwell Bank may be incorporated. 

If so there is no requirement for you to send a Form 1099--NEC to them for property management. 

If you issue a Form 1099-NEC, it would be beneficial to include a statement that shows the breakdown of the amount reported..  .  

Am I Required to File a Form 1099 or Other Information Return?

[Tmert771]

How about a partial rental. 11% of home. Professional lawn maintenance is nearly $2000. I know that at most 11% could be deducted but what about a 1099 NEC, necessary?