cancel
Showing results for 
Search instead for 
Did you mean: 
New Member

I received a 1099-MISC from my real estate agent for a commission rebate. Is this considered taxable income for me?

When we purchased our new home, our real estate agent gave us a commission rebate check and now sent us a 1099-MISC, however, I was reading that it is not considered taxable income. How do I report this income without having issues with the IRS?

1 Best answer

Accepted Solutions
Highlighted
Employee Tax Expert

I received a 1099-MISC from my real estate agent for a commission rebate. Is this considered taxable income for me?

Real Estate commission rebates are not taxable income, but do reduce your home's basis. The realtor needs to issue you a corrected form.

See TurboTaxMichael1's answer for how to file if the realtor does not issue a corrected form.

"The IRS has issued a private letter ruling that refunds of commissions by a real estate broker are not taxable income.  In the ruling that discuss that no Form 1099 needs to be issued by the broker, and the buyer would treat the refund as a reduction in the cost of the property.  See PLR 157111-06 (http://www.irs.gov/pub/irs-wd/0721013.pdf).

If your realtor has given you a Form 1099-MISC for any rebate they did so in error.  If they won’t issue a corrected form you would need to:

·         Prepare a return not including the amount on the Form 1099-MISC.

·         Attach a statement indicating why it is not reported (perhaps quoting PLR 1571111-06), and

·         File on paper.

Unfortunately, adding any statement to a tax return negates the ability to e-file."

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"

View solution in original post

8 Replies
Highlighted
Employee Tax Expert

I received a 1099-MISC from my real estate agent for a commission rebate. Is this considered taxable income for me?

Real Estate commission rebates are not taxable income, but do reduce your home's basis. The realtor needs to issue you a corrected form.

See TurboTaxMichael1's answer for how to file if the realtor does not issue a corrected form.

"The IRS has issued a private letter ruling that refunds of commissions by a real estate broker are not taxable income.  In the ruling that discuss that no Form 1099 needs to be issued by the broker, and the buyer would treat the refund as a reduction in the cost of the property.  See PLR 157111-06 (http://www.irs.gov/pub/irs-wd/0721013.pdf).

If your realtor has given you a Form 1099-MISC for any rebate they did so in error.  If they won’t issue a corrected form you would need to:

·         Prepare a return not including the amount on the Form 1099-MISC.

·         Attach a statement indicating why it is not reported (perhaps quoting PLR 1571111-06), and

·         File on paper.

Unfortunately, adding any statement to a tax return negates the ability to e-file."

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"

View solution in original post

Highlighted
New Member

I received a 1099-MISC from my real estate agent for a commission rebate. Is this considered taxable income for me?

My realtor also issued 1099-MISC for commission rebate. Do I ask them to issue a corrected 1099-MISC, or some other form?
Highlighted
New Member

I received a 1099-MISC from my real estate agent for a commission rebate. Is this considered taxable income for me?

Hi,

how did you report that 1099, i hope we dont have to pay tax on that?

Highlighted
Employee Tax Expert

I received a 1099-MISC from my real estate agent for a commission rebate. Is this considered taxable income for me?

@jain-manish, @aanand84   

 

See above answer. Ask for a corrected 1099-MISC. If that doesn't happen then you can either file a paper return with the explanation given above, or enter the 1099-MISC as reported, then make an adjustment in the Other Income section of Schedule 1 as a negative sum. In this way, the reporting of the 1099-MISC form is satisfied, but the effect will be zero.

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
Highlighted
Level 1

I received a 1099-MISC from my real estate agent for a commission rebate. Is this considered taxable income for me?

Could you advise on how to do this via TT? Also, if the realtor could amend the 1099 he sent to me, what should he change? Is it still a 1099 misc or something else? Thanks

Highlighted
Employee Tax Expert

I received a 1099-MISC from my real estate agent for a commission rebate. Is this considered taxable income for me?

If the realtor is amenable to changing the 1099-MISC, the realtor would have follow the instructions in 2019 General Instructions for Certain Information Returns

 

If the realtor filed the original 1099-MISC on paper, please see "H. Corrected Returns on Paper Forms".

 

If the realtor filed the original 1099-MISC electronically, please see "F. Electronic Reporting".


Note that the realtor should not have filed a 1099-MISC or sent you anything.

 

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
Highlighted
Level 1

I received a 1099-MISC from my real estate agent for a commission rebate. Is this considered taxable income for me?

Thanks. I just don't know how to convey this whole message to my realtor/their CPA because I asked them once and all they told me is that's my income and I'll need to pay tax for that.

Highlighted
Employee Tax Expert

I received a 1099-MISC from my real estate agent for a commission rebate. Is this considered taxable income for me?

Yes your realtor/CPA is correct.  If you received a 1099-MISC for a real estate commission, that is income you received from your real estate broker.  You will report this income on Schedule C along with your other income and expenses.   

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"