If an individual owns a rental home and has a contractor do the remodeling before the sale of the rental home and if the dollar amount is over $600, does one have to prepare a 1099 for the IRS and Contractor?
My question really is: do individuals have to issue a 1099? or is it only businesses?
It looks to me like the real question is whether or not a rental activity is to be considered a "trade or business" for the purpose of filing 1099s, and that this very question went through a period of upheaval a few years ago, ending up where it started out, with what amounts to *no answer*...!!
The history of the question is out there on the internet. Look for the history of this very frustrating issue.
Try this for starters:
This is not my understanding. Sec. 3a of PL 112-9 repealed Sec. 6041(h) of the Internal Revenue Code for all payments made after 12/31/2010. Sec. 6041(h) was the section that made issuing of 1099-MISC by rental property owners mandatory. I am not aware of any amendments to Sec. 6041 that has changed the law.
As far as I can tell, only someone who meets the definition of being a real estate professional and whose rental income makes up the majority of his/her income has to issue 1099s.
My deal isn't rentals, but loans (2) to finance property purchases. I hold the mortgages and issue 1099's to the buyers ---
To flip this around, other than the modest effort of printing and mailing them, is there any downside to sending 1099s? I'd think they'd be useful to support expense deductions.
Mathedman, if the two borrowers are paying you the interest on their mortgages, please don't send them 1099s reporting those payments. It goes the other way 'round....
No, you send Form 1098 to any "individual" borrower who pays you $600 or more in interest for the year.
"modest effort"? Sounds like a PITA to me.
What happens if someone is not required to issue 1099s but does so and issues some erroneous 1099s?
What happens if someone is not required to issue 1099s but does so and fails to issue all that would be required if they were in fact required?
What happens if someone is not required to issue 1099s but does so and then ceases to do so in subsequent years?
But is that required?
Alan, you wrote this, above:
"...only someone who meets the definition of being a real estate professional and whose rental income makes up the majority of his/her income has to issue 1099s."
Can you tell us where you found that?
"Use Form 1098, Mortgage Interest Statement, to report mortgage interest (including points, defined later) of $600 or more received by you during the year in the course of your trade or business..."
The question, rightly, is whether this activity rises to the level of a "trade or business".
Ira Smilovitz, EA
Are we talking about 1098s, which report interest *received* by a lender, or are we talking about 1099s, which report almost everything that's *paid out* to a service provider?
Thanks for waking me up with this thread.
Our little family business has been located in rented offices for nearly 40 years and every one of the six or so offices we've been in included office cleaning and waste removal as part of the rent. But, early last year we moved to an office where those services are not supplied by the landlord and we had to either do it ourselves or hire a cleaning company. We chose to hire the firm which did many of the other tenant's offices as well as the building's halls and bathrooms.
So, today I called that cleaning company, got their tax ID number and sent them a 1099-MISC form for the nearly $2,600 we'd paid them during
2017, and a copy to the IRS of course.Jeff
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