topic Rental Property Sold how to handle credits in Investors & landlords

Rental Property Sold how to handle credits

tmny277 — Mon, 19 Jan 2026 22:49:24 GMT

Hello, I sold a rental property at the tail end of 2025. As part of the sale, the January Rent was credited to the new buyer. In Jan 2026 I got the rent as usual to reimburse the credit.
The rent was being paid by section 8 housing assistance. So next year (2027) I will get a 1099 from them for 1 months rent even though I no longer owned the property in 2026. This payment is a wash for me so how do I handle it going forward? Should I somehow handle it as part of the property sale, otherwise it will be reported as rental income for 2026.

I want to avoid paying income tax on it next year since it is just a reimbursement of the credit.

Thanks!

Re: Rental Property Sold how to handle credits

PatriciaV — Wed, 21 Jan 2026 00:46:39 GMT

Yes, if you kept the reimbursement, include the credit in your sale transaction. Then next year you can report the 1099 as miscellaneous income. Basically, you're shifting rental income from 2025 to other income in 2026.

Re: Rental Property Sold how to handle credits

tmny277 — Wed, 21 Jan 2026 14:58:10 GMT

Thanks Patricia, To clarify I'm trying to avoid classifying it as income (rental or otherwise) because its not rental income. Its Capital Gains from the property sale. I have no rental income for January 2026 since I no longer owned the property.

Re: Rental Property Sold how to handle credits

M-MTax — Wed, 21 Jan 2026 15:10:19 GMT

I don't think there's much you can do in this scenario. If it were part of the sales transaction, then you wouldn't be receiving a 1099 for 2026.

If you do receive a 1099-MISC, you're not going to have much of a choice other than reporting it as miscellaneous income as indicated by @PatriciaV

Re: Rental Property Sold how to handle credits

tmny277 — Sun, 25 Jan 2026 18:26:14 GMT

Understood, thanks for the feedback