I recently bought a house. My agent gave me $2,000 as a rebate. My agent said she wants to send me a 1099. If I get a 1099 do I have to pay taxes? I thought that this is like a credit where I do not pay taxes. My friend said that it is a credit but but I need to lower the price of the house by this amount for capital gain purposes but he was not sure how to handle the
Under what theory? It's a nontaxable rebate (IRS Publication 525). Tell her to talk to her accountant, because there are penalties for filing false
1099's, and if she does so to you the IRS will hear about it pronto.The $2,000 does reduce your purchase price from that shown on the HUD-1, so keep a record of it with your closing papers should you ever have to compute your basis.
Also, from the agent's point of view, the rebate is not taxable income. On a Schedule C, if the entire real estate commission is included in gross receipts, the $2K should be shown on Line 2 as a return/allowance.
As for the penalty, I see where in the General Instructions for Forms
1099, etc, there is mention of civil damages for fraudulent filing of information returns (the *recipient* may sue you, it does not sound like the IRS gets involved). I wonder what happens if you mail a recipient copy of a 1099-MISC by the end of January, but before the end of February, realize you made a mistake (for example, the would-be issuer does not conduct a trade or business) and therefore do not file the form with the IRS.-Mark Bole
You already have 2 longer answers.
Short answer: NO. Not income to you. It reduces your basis.
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