You only have to prepare 1099-MISC forms if you paid someone (property manager, handyman, etc.) $600 or more during the year. There is an exception to this rule if the person/business you paid is taxed as a corporation. Otherwise, you can just report your rental income and expenses on Schedule E.
Keep reading for more information on rental property that may help you.
Generally, rental properties
are considered passive activities and are subject to the passive activity loss rules. The rules are complex. Simply put, the
passive activity rules limit your ability to offset other types of income with
net passive losses (rental losses and other types of passive losses).
That said, if you actively
participate in a rental real estate activity, you can deduct up to $25,000 of
your rental loss even though it’s passive. To actively participate means that you own at least 10% of the
property, and you make major management decisions, such as approving new
tenants, setting rental terms, approving improvements and so forth.
There is a phaseout on
claiming this loss. If you have modified Adjusted Gross Income over $100,000,
the $25,000 rental real estate exception decreases by $0.50 for every dollar
over $100,000. The exception is completely phased out when your modified
adjusted gross income reaches $150,000.
This article on Real Estate Tax and
Rental Properties has more details on rental properties.
