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Do You Own Los Angeles Rental Property? 1099 Your Vendors

By
Real Estate Broker/Owner with Home Jane Realty BRE# 01439865


If you own Los Angeles rental property the IRS are going to want their share.

Los Angeles Rental Property Owners, Small Property Owners Must 1099 Vendors

Even if you are a casual investor in Los Angeles rental property as of the beginning of 2011 any payment made to vendors over $600 must be followed with a 1099. Owners of larger Los Angeles properties have had to do this for many years, but when the 2010 Small Business Jobs Act (H.R. 5297) was enacted it extended the requirement to owners of any rental property.

What do you need to get from your vendor?

Any vendor who has worked on your Los Angeles rental property, and has been paid in excess of $600, needs to provide you with their name, address, and tax identification of Social Security No. Keep a record on the amount you have paid them and at the end of the year issue a 1099 for that amount.

Are their any exceptions?

  • If complying with the requirements causes you a hardship.
  • The rental is a temporary rental of your own property.
  • The income from your rental does not meet the minimum income threshold.

The information on the second two points is not yet out. So stay tuned.

Who are defined as vendors?

Independent or freelance workers who provide real estate-related services: plumbers, painters, landscapers, etc. People who don't receive a W2 from you and to whom you have paid more than $600 over the course of the year. It does not have to be at one time, so keep track of what you pay, and if at the end of the year it exceeds $600, the out comes the 1099. There are penalties for filing late. You can get a 30-day extension for filing your forms with the IRS, but your vendors need to receive them on time, usually by the 31st of January, in order for them to do their taxes. If you are the managing small Los Angeles rental property make sure the owner knows about this new law.

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Comments(21)

Diane Lynch
Realty Executives Premiere - Warrenville, IL
Real Estate Broker

Hi Jane,

We've got that law in Illinois as well....I guess it's a federal law. Will make life a little more difficult for me as a property manager.....

Jan 25, 2011 02:59 PM
Jane Peters
Home Jane Realty - Los Angeles, CA
Los Angeles real estate concierge services

Jon,  don't you love it.

Diane,  yes it is a federal law.

Jan 25, 2011 03:01 PM
Juli Vosmik
Dominion Fine Properties - Scottsdale, AZ
Scottsdale/Cave Creek, AZ real estate 480-710-0739

Hmmmmmm, I need to check into this.  I just checked and I pay my landscaping clean up company more than that a year.  Okay, all you tax people out there - what's OUR liability?  If we 1099 them, do we owe anything? 

Thanks for the head's up, Jane.

Jan 25, 2011 03:04 PM
Jane Peters
Home Jane Realty - Los Angeles, CA
Los Angeles real estate concierge services

Juli,  as far as I know you can write off the expenses.  They are the one who owe.

Jan 25, 2011 03:09 PM
Scott Hayes
(512) 786-8300 - Austin, TX
Realty Austin, Broker Associate

Stuff like this is why I love my cpa

Jan 25, 2011 03:15 PM
Jane Peters
Home Jane Realty - Los Angeles, CA
Los Angeles real estate concierge services

Scott,  mine is Turbo Tax :)

Jan 25, 2011 03:18 PM
Diane Lynch
Realty Executives Premiere - Warrenville, IL
Real Estate Broker

And the CPA is supposed to police this law and turn you in if you don't abide! Not fair to them...

Jan 25, 2011 03:18 PM
Doug Anderson
Tucker Associates Real Estate Services - Danville, CA
Bay Area Real Estate Views

Jane: Quite an oxymoron that additional paperwork and additional overhead would be added to "mom & pop" businesses under the bill known as the Small Business Jobs Act.

Jan 25, 2011 04:30 PM
Jane Peters
Home Jane Realty - Los Angeles, CA
Los Angeles real estate concierge services

Doug,  I am surprised they didn't lower the limit from $600.

Jan 25, 2011 04:33 PM
Craig Rutman
Helping people in transition - Cary, NC
Raleigh, Cary, Apex area Realtor

Great information here Jane. I'll be more than 1/2 of the folks who own rental property don't file 1099's with their vendors. Even with the increase in paperwork, it's a business and it should be run like one.

Jan 26, 2011 12:20 AM
Janice Roosevelt
Keller Williams Brandywine Valley - West Chester, PA
OICP ABR, ePRO,Ecobroker

No wonder we spend so much money on government. Someone has to generate the form, check, monitor. Ugh!

Jan 26, 2011 12:52 AM
Cherise Selley
Selley Group Real Estate, LLC - Colorado Springs, CO
Colorado Springs Realtor

Jane,

The casual investor will no longer be casual in the future.  I think the 1099's are a speed bump in the road of what lies ahead... g

Jan 26, 2011 01:11 AM
Ann Allen Hoover
RE/MAX Advantage South - Hoover, AL
CDPE SRES ASP e-PRO Realtor - Homes for Sale - AL

Hi Jane, do you know the deadline for filing 1099s?  January 31st or February 28th?  Anyone?

Jan 26, 2011 01:30 AM
Norma Toering Broker for Palos Verdes and Beach Cities
Charlemagne International Properties - Rancho Palos Verdes, CA
Palos Verdes Luxury Homes in L.A.

Jane - Thanks for giving me a good reason to contact the two investors I sold income property to last year.

Jan 26, 2011 02:28 AM
Kim McMahon
Executive Realty Group - Skokie, IL

Jane~ Geat Post!  I was happy to see that "joe" was working again. I heard after the '08 election times got tough :)

Jan 26, 2011 06:08 AM
Jane Peters
Home Jane Realty - Los Angeles, CA
Los Angeles real estate concierge services

Craig,  I agree.  I will have to stop my cleaning lady coming once so that she doesn't go over the $600 marker.

Janice,  they need their pound of flesh.

Ann,  I believe it's January 31st.  It is not legally enforced though.

Norma,  that's a good excuse.

Kim,  I don't think he has much to worry about.  He made his fortune.

Jan 26, 2011 06:34 AM
Bob & Leilani Souza
Souza Realty 916.408.5500 - Roseville, CA
Greater Sacramento Area Homes, Land & Investments

Jane, I completely agree with Jon in comment #1. Sigh.

Leilani

Jan 27, 2011 05:49 PM
Jane Peters
Home Jane Realty - Los Angeles, CA
Los Angeles real estate concierge services

Leilani,  :(

Jan 28, 2011 08:14 AM
Ann Allen Hoover
RE/MAX Advantage South - Hoover, AL
CDPE SRES ASP e-PRO Realtor - Homes for Sale - AL

I check it out, and you should give the recipient of the 1099 their copy by January 31st, but you have until February 28th to send the IRS their copy......and you have to use the actual form with the pink print.  A copy isn't acceptable.

Jan 29, 2011 08:39 AM
Jane Peters
Home Jane Realty - Los Angeles, CA
Los Angeles real estate concierge services

Ann,  thanks for checking that out.

Jan 29, 2011 10:59 AM