Professional Standards Newsletter

ARTICLE CORRECTION
Tuesday, January 4, 2010

Please note that there was a publication error on NAR’s website when the article “New IRS 1099 Requirements for Landlords” was originally extracted for distribution to AAR members. Thereafter, NAR corrected the article without notification to the members. The legal affairs department at NAR has confirmed the error and asked that any members who previously received the article should note the correction.

The corrected article clarifies that, “All landlords who receive $600 or more in rent for the year must send a 1099 to all service providers that the landlord paid $600 or more during the year, such as plumbers, carpenters, yard services, and repair people.” The corrected article in its entirety is below.

We apologize for any confusion.

CORRECTED ARTICLE

Starting in 2011, there is a new tax requirement for landlords. All landlords who receive $600 or more in rent for the year must send a 1099 to all service providers that the landlord paid $600 or more during the year, such as plumbers, carpenters, yard services, and repair people.

The new requirement applies to owners of both residential and commercial property. Prior to 2011, this requirement had only applied to those involved in full-time property management, but now the requirement covers all types of landlords. Landlords will need to gather federal tax ID numbers from service providers in order to file the 1099s. Failure to file the 1099s with the IRS can result in fines of $50 per 1099 not filed with the IRS. In 2012, these requirements will expand to cover providers of good to landlords.

NAR actively opposed this change in the law and is working with others to have this requirement repealed or otherwise modified. Congress took this action in order to assure that income paid to contractors can be verified through a section 1099. To read more about the history of the law as well as the actions NAR has taken to oppose this change in the law, click here.

PREVIOUS VERSION OF ARTICLE

Starting in 2011, there are new tax requirements for landlords. All landlords who receive rental income of more than $600 a year from a tenant must file a Form1099 information return for all rental income received and send a copy of the 1099 to the tenant. Landlords must also send a 1099 to all service providers who received payments of $600 or more during the year, such as plumbers, carpenters, yard services, and repair people.

The new requirement applies to owners of both residential and commercial property. The only exception to the new requirements occurs when an owner temporarily rents out his/her primary residence, so long as the owner’s income does not exceed a “minimal” amount to be determined by the IRS. Prior to 2011, this requirement had only applied to those involved in full-time property management, but now the requirement covers all types of landlords. Landlords will need to gather federal tax ID numbers from both their tenants and service providers in order to file the 1099s. Failure to file the 1099s with the IRS can result in fines of $50 per 1099 not filed with the IRS.

NAR actively opposed this change in the law and is working with others to have this requirement repealed or otherwise modified. Congress took this action in order to assure that income paid to contractors can be verified through a 1099. To read more about the history of the law as well as the actions NAR has taken to oppose this change in the law, click here.

ADDITIONAL RESOURCE: You can listen to a related podcast from NAR.

This content originally appeared in the NATIONAL ASSOCIATION OF REALTORS® December 2010 “Did You Know?”segment.

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