I own a investment property we renovated at the end of 2016. We are funding the construction with a construction loan. Do I need to 1099 the contractor if he is being paid by our bank via our loan?

[AmandaR1 · Accepted solution]

Yes, if the property is held to earn income (not personal) and you'll be deducting the amounts paid (deferred through capitalization) for schedule E or schedule C, then you should file the 1099 for the contractor. The method of payment does not really affect the requirement. 

The only other exception would be if the contractor was a corporate entity, then you would not need to file the form. This does not include LLCs or Partnerships, only a corporation is excluded.