Hello,
I received one 1099-K from Apartments.com (a.k.a. CoStar Realty) for three separate rental properties. The amount on the 1099-K is much higher than the actual amount of rent I received. I'm assuming this amount must include every penny received in my Apartments.com account, including, rent, late fees, utilities, security deposits, etc.
Which property do I associate the 1099-K with?
How/where do I allocate/enter the one 1099-K for the three properties?
What do I do about the late fees, utilities and security deposit amounts that are included on the 1099-K?
If I enter the actual amount of rent received for each property, like I always have in the past, the total rents received for the three properties won't match the one 1099-K?
Thank you for your help!
DGX
First, every penny that you receive for late fees and utilities should be being entered into your tax return as income. The utilities should be offset with a utility expense and late fees are just cash in your pocket. They can call it utilities and late fees but if you get to keep it it is rent.
Security deposits are trickier but you can enter them as income and then expense them later if you return them. Or you can enter them on the return and then create a matching expense for "Security Deposit Held For Tenant" or something like that. Then you take the deposit into income later if the tenant loses it to you. If you keep it it is income, though..
Either way you should enter the actual cash that you received and spent for each of the three properties regardless of what the 1099-K says. You should figure out why there is a difference - if there is one after you enter everything as income that you should - and document it so that you can answer questions later if anyone asks. The schedule E will total all of your entries for all three properties and that should match or exceed the 1099-K.