New Reporting Requirements for Landlords

The NAR reports Small Business legislation (HR 5297) recently signed into law includes a new revenue provision that will create additional burdens for anyone who receives rental income. Under current law, property managers are generally required to provide Form 1099 on many of the expenditures they incur as part of their management of rental property. The new law expands this rule so that ANY person who receives rental income (not just property managers) will be required to report all expenditures of more than $600 to anyone from whom they purchase services.

The landlord will file IRS Form 1099 with the IRS and with the person who provided the service. Thus, any landlord who purchases such services as plumbers, yard or garden workers, electricians or any other service will be required to report payments any time the total expenditures/payments to a particular vendor in one year exceed $600. The new requirement goes into effect as a permanent feature of the law starting with expenditures on or after January 1, 2011.

NAR conducted a Call for Action opposing this proposal in May 2010. Congress nonetheless adopted it as part of the "pay-for" of the small business benefits the legislation created.

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