topic Rental expenses in Investors & landlords

Rental expenses

sethornton51 — Tue, 22 Dec 2020 06:24:20 GMT

If I hire a company to install or replace something at my rental property, do I have to issue a 1099-misc or does that only apply if I hire an individual to do the work?

Re: Rental expenses

Hal_Al — Tue, 22 Dec 2020 13:21:15 GMT

Only individuals and even then it's a little fuzzy.

It became a little fuzzy under the new 2018 tax law. Landlords are, generally, still not require to issue 1099-Misc forms to service providers.

Reference: http://www.forbes.com/sites/irswatch/2013/03/06/should-landlords-be-filing-1099s-for-service-providers/

But, a landlord 1099-misc may be required to qualify for the QBI deduction. Reference: https://www.nolo.com/legal-encyclopedia/do-landlords-need-to-file-form-1099-misc.html

Most rental properties do NOT qualify for the QBI deduction.

Re: Rental expenses

Anonymous_ — Tue, 22 Dec 2020 14:06:09 GMT

@Hal_Al wrote:
Most rental properties do NOT qualify for the QBI deduction.

That is correct and there is a Section 199A safe harbor for rental real estate.

See https://www.irs.gov/pub/irs-drop/rp-19-38.pdf

Re: Rental expenses

AmeliesUncle — Tue, 22 Dec 2020 14:49:43 GMT

If the rental rises to the level of a "Trade or Business" and you pay someone $600 or more during the year for services, you are required to issue a 1099 to a non-corporate business. If they are a corporation, a 1099 is NOT required. But you would want the business to fill out a W-9 so you KNOW that they are a corporation or not.

If the rental does NOT rise to the level of a "Trade or Business", no, a 1099 is NOT required.

Unfortunately, whether or not a rental rises to the level of a "Trade or Business" is tricky and often unclear. You would need to do some research on that matter.

Re: Rental expenses

Critter-3 — Tue, 22 Dec 2020 14:52:34 GMT

Bottom line ... even if they are not required it would not hurt to issue them to CYA. Corporations are still exempt so have them fill in a W-9 so you know their status.