I just bought a Rental. Do I need to 1099 my vendors?
Congratulations on preparing for your future by investing in real estate! If this is your first investment property or a property you have rented for years, be aware the laws have changed effective January 1, 2011.
If you are not using a Property Management Company for your rental property, by federal law section 2101(h) of H.R. 5297 (Small Business jobs and credit act of 2010), any person who receives rental income must provide an IRS Form 1099 for aggregate annual payments of $600 or more made to any service provider. Service providers would include a plumber carpenter, gardener, handyman, painter, contractor etc. The law applies to residential and commercial properties.
***Important: The law took effect January 1, 2011. That means you need to issue the 1099's next year, 2012, for work done during 2011.
If you are using a property management company for the rental of your property, it is their responsibility to file the 1099's. If you are using a property management company but have asked to pay vendors direct, check your records. Have you paid them more than $600? If so, it is your responsibility to provide them a 1099. Rental properties are an excellent investment, but the income taxes can be tricky. Visit the IRS website for more information.
Taking care of tracking payments to service providers, and providing the appropriate tax forms is one of the many advantages to having a property manager. Not all Realtors offer property management services. If you are interested in finding out more about the property management services I offer, please contact me.