As a realtor, I often rebate part of my commission to buyers. My 1099 is for the income I received (after deducting the rebate).Can I still claim the rebate on my taxes?

[Julia-B]

For example, if I received $4050 in commission but rebated $1050 toward buyers closing costs (disclosed on settlement statement), I only got a check for $3000 at closing.  The $3000 was the only amount included on my 1099.  Can I still claim the $1050 as a rebate?

[Zbucklyo]

No, because you would be claiming an expense that was never included in your income.  You'd have to include the rebate in income for you to be able to expense it.  Here's the alternative way, which amounts to exactly the same thing:  Commission income $4,050, commission rebate $1,050, net income $3,000. 

[Honda0810]

Hi I have a great  question  in connection to previous question

What 1099 form should would we use when providing a credit rebate to home buyer ? My commission check was $4000 and title company didn't apply $3000 toward the closing cost disclosure so I wrote a check to buyer after. What form should they fill out ?

[TomD8]

@Honda0810 — No 1099 is issued to a buyer who is given a commission rebate.  That’s because a commission rebate is not considered taxable income to the buyer.  It is instead considered an adjustment in the price of the home.  When the buyer sells the home in the future, he should subtract the rebate amount from his cost basis in the property.

[schervinskis]

Love this topic.  What if I’m the broker and buying my own property?   If I rebate the commission to my own closing costs, do I get 1099 on the portion applied to closing?

[TomD8]

Yes, because the funds you used to pay the closing costs are drawn from from the listing broker's portion of the commission.  Therefore the 1099-MISC you receive from your listing broker must include that amount.

[Hal_Al]

Q. Do I get 1099 on the portion applied to closing?

A.  That's between you and your broker. If you do get a 1099-Misc, you must report the income on your tax return and go no deduction for the "rebate" since it was for your personal benefit.

It seems easy enough to "structure the deal" so there's no income to you.  I.e. the seller accepts a lower purchase price in return for you not charging a commission on the sale. 

[schervinskis]

I am an independent broker.  I’m not sponsored by anyone.  

Initially, I was going to use the cash from commission on updates.  That’s why I structured the deal this way.  

Now I’m wondering if I use the cash for closing, if I’m still taxed on it.  When I was an agent and rebated my clients, that portion wasn’t 1099’ed. 

[Hal_Al]

I'm of the opinion that if the closing statement shows that amount as commission, it is considered income and the closing agent will issue you a 1099-Misc for the commission. A 2nd 1099-Misc  should not be issued to you , as buyer, for applying the $ to closing costs.