1099's for property management firms?

[Margaret CPA in OH]

Client paid lots of money for property manager for unsold home when they had to move out of state.  I can't find any where whether this is definitely or not requiring a 1099.  In some respects, renting the home is a business.  What do you folks do?

[Lee B]

First, property managers only issue 1099 s for Rental Income and of course to Independent Contractors providing services.

My clients using property managers for their rentals always receive a spreadsheet or a statement detailing all of the expenses and fees charged to them.

These expenses are  deductible on Schedule E for rentals. Depending on  the circumstances, the expenses might be deductible as sales expenses if the home is sold.

If the home is just setting there empty for some time, without being sold or rented, none of the expenses may be deductible, unless the expenses rise above the level of

repairs and maintenance.

[jklcpa]

51 minutes ago, Margaret CPA in OH said:

Client paid lots of money for property manager for unsold home when they had to move out of state.  I can't find any where whether this is definitely or not requiring a 1099.  In some respects, renting the home is a business.  What do you folks do?

It sounds like they are renting it, not just overseeing idle home until sold. Is that right?   The determining factor would be if this activity rises to the level of a trade or business, and I'd say probably not since their intention isn't for ongoing profits from rental but is being rented because it hasn't yet sold. If that is the case, I wouldn't issue a 1099 to the property manager.

[Margaret CPA in OH]

Thanks, cbslee, but I do know everything that  you just wrote so must have phrased my question incorrectly.  Yes, client received 1099 for gross rents received by management company and statement listing all expenses.  My question is whether my client should issue a 1099MISC to the management company for the fee in excess of $2000 for managing the property.

Thanks for the reply!

[Margaret CPA in OH]

Thanks, Judy, the answer I was seeking.  At least in local returns, rental property is considered a business hence my question. I've had several clients with rental properties but this is the first one paying a management company and hefty fee for same.  Never too long in this field to have new things appear!

[jklcpa]

Do local issues require it, meaning the local would be looking for things like 1099s?  I don't think it actually hurts to issue except that it would be late at this point.

[Margaret CPA in OH]

This client doesn't have a local CO return so it really isn't an issue then.  Most of my clients are in Ohio but, again, none have ever paid a management fee.  They are just renting out another property and managing everything themselves.

I know it is late for filing but just got the information a few days ago.  Not my fault.  Another client is chronically late with data and always has to have 1099INT filed late.  They have never told me or complained about late filing fees because I tell them every year when they are due.  Horse - water - can't make it happen on my own.

[Catherine]

There is no penalty for filing a 1099-MISC that is not needed - but there ARE penalties for not filing when they are needed.  Better safe than sorry, I always say!