shared real estate commission - taxable or not?

If she deducts it as business expense, then it's not a gift. Gift cannot be deducted.

If she is actually sharing commissions, then anyone who receives a payment from her does have commission income and must report it as taxable gross income. It wouldn't matter whether she sends or doesn't send the 1099. If on the other hand she is merely saying thank you, then it is a gift and does not have to be reported as income. As to her tax return: if she is sharing commissions, then she would only report her net (gross less the amount shared) commission as income on her business tax return. If she is making a gift, then she would report her gross commission and get no tax deduction for the gift to an individual.

-- Alan

What is it with these real estate people these day?

It is not income to you, but simply a reduction in your purchase price. Don't worry about it. If she does send you a 1099misc send it back to her (a copy of course) and say "no thank you". And if IRS ever later questions you on it, respond and document the facts. One aspect of this pertaining to the realtor might be the "gift" aspect, for business gifts are subject to a 25$ limit as a business deduction. But she won't bother with that, I'm sure. ChEAr$, Harlan Lunsford, EA n LA

I think it's a reduction in the cost (basis) of the property.

Seth

As posted on another group, the timing of the commission "rebate" may determine its legality and tax consequence:

While this site

Answer: According to Fannie Mae guidelines and federal laws, all credits must be given on the settlement statement (not after closing). Failure to disclose the payment to the buyer on the settlement statement can constitute a "false statement to a lender" (a federal crime), and also a violation of the License Law and Commission rules. You can read an email to us written from HUD on this issue. You can also read what a state real estate commission wrote about this federal statute. As long as the rebate is listed on the HUD-1, it is perfectly fine in the majority of states, and most lenders do allow the rebate on the HUD-1. However, if your lender will not allow the rebate on the HUD-1, then the only way for you to get the credit would be to have the seller lower the sales price by the amount of the rebate. It is the buyer's responsibility to ensure they have selected a lender who will allow the rebate on the HUD-1 statement.

I intend to live in the house that I'll build on this lot for more than 2 years to avoid capital gains. Would that matter then what my cost basis was? If I decided to flip the property then I inagine I would have to reduce by cost basis by the check, but would that matter after 2 years of living in that house?

If you luck out and sell the house for a $1 million profit, the cost basis matters. If the profit is under the exclusion limit, it doesn't. Seth