INSIGHTS & IDEAS

Information reporting for real estate

Under the Small Business Jobs Act of 2010, for payments made after Dec. 31, 2010, a person receiving rental income from real estate will be considered to be engaged in a trade or business of renting property.  Thus, recipients of rental income from real estate generally are subject to the same information reporting requirements as taxpayers engaged in a trade or business. In particular, rental income recipients making payments of $600 or more during the tax year to a service provider (such as a plumber, painter, or accountant) in the course of earning rental income are required to provide an information return (typically Form 1099-MISC) to IRS and to the service provider.) The rental property expense payment reporting doesn't apply to any individual who receives rental income of not more than a minimal amount; any individual if substantially all rental income is derived from renting the individual's principal residence on a temporary basis; or any other individual for whom the Code Sec. 6041 requirements would cause hardship, as determined under IRS regs. (Code Sec. 6041(h)(2))

This provision was repelled in April 2011.