Second Homeowners Of Asheville Beware: New Tax Reporting Laws

By
Real Estate Broker/Owner

Finally, fairness prevails!

No more paying "under the table".

This is my response to the folks who are declaring the "extra tax burden" on second homeowners due to the Small Business Jobs and Credit Act of 2010.

ARG!

There is no extra tax burden, only more paperwork, specifically documenting payment of others and completing  1099s. And actually, for property managers, we already have this system in place and it is much easier then performing weekly payroll.

The naysayers are worried that second homeowner will be overburdened . Yes, the second homeowner will have to buy accounting software and manage the shuffling of paperwork.  But why is this an unfair practice? The homeowner is using their second home as a small income producing business? Right. So why not treat it as such and lets be professional and come clean.

The real issue is not in more work for the homeonwers. This is only half of the truth.  While soon to be history, the practice of paying  contractors/vendors  for such routine repairs and cleanings have been paid under the proverbial table. Now it will be law to record, by 1099 documents, all payments to individuals and business' over $600.

Why is it fair to tax some people and not others, especially when they are doing the same job? I am not sure why this is so outlandish. I am glad to see this implemented in January 2011.

I applaud this new tax law.  If a second homeowner decides this book keeping is too much, there are plenty of upstanding property management companies who can easily alleviate the pains of this new law.

Comments (2)

Lynda Eisenmann
Preferred Home Brokers - Brea, CA
Broker-Owner,CRS,CDPE,GRI,SRES, Brea,CA, Orange Co

Hi Carolina,

So help me understand this, you mean if an indvidual owns a second home, i.e. a vacation home they pay an additional tax above and beyond what an individual home owner would pay?

Sep 29, 2010 06:31 PM
Carolina Mornings Realty
Asheville, NC

Hi Lynda,

Sorry I am not clear. Let me try to give you an example so clear this up. There are no additional taxes for the homeowner. The reporting of services needs to be accounted for so the vendors/contractors will need to show income received.

If an individual owns a 2nd home, and uses it as a business (rents it out), the homeowner either cleans the house themselves, hires a management company or hires their next door neighbor. If it is the next door neighbor and the neighbor recieves payment in excess of $600 then the Homeowner must give a 1099 to the neighbor and file this with the IRS.

So the homeowner is only reporting to the IRS the money they paid to the housekeeper. Now the onus is on the housekeeper to report their income, documented by the 1099. Usually, the housekeeper/neighbor is paid "under the table". With this new law in place the owners who do not use a property management company, will need to implement this new accounting system.

Hope this makes sense.

Shari

 

Sep 30, 2010 02:51 PM