1099 For Property Administration: Every little thing To Know

Property managers are going to be busy in 2023. In keeping with our 2023 Property Administration Trade Report, 92% of property managers we surveyed plan to increase their portfolios within the subsequent two years. Given the present financial local weather, they’re wanting to try this by discovering artistic, tech-led options to streamline their companies whereas looking for out new purchasers.

With a lot on the horizon for property managers, property administration tax reporting, could also be the very last thing on their minds. Nevertheless it’s nonetheless an important a part of 2023 planning.

That’s why we’ve created a information to assist make the 1099 submitting course of as clean as attainable.

Let’s dive into what it’s essential know in regards to the 1099-MISC and not too long ago launched 1099-NEC types, so that you’ll be arrange for fulfillment in 2023:

What Are 1099-MISC and W-9 Types?

The IRS makes use of the 1099-MISC to report quite a lot of earnings acquired that isn’t reported on customary W2 types. Whereas non-employee compensation is now filed underneath the 1099-NEC (we’ll get to that later), you’ll nonetheless must file a 1099-MISC for:

  • Lease earnings
  • Prizes and awards
  • Money paid from a notional principal contract to a person, partnership, or property
  • Fishing boat proceeds
  • Medical and well being care funds
  • Crop insurance coverage proceeds
  • Funds to an legal professional
  • Part 409A deferrals
  • Non-qualified deferred compensation
  • Different earnings funds

For property administration tax submitting, that signifies that 1099-MISC types are the first methodology to report:

  1. Lease supplied to an proprietor from a leased property totaling $600 or extra
  2. Lawyer charges totaling $600 or extra

Every time a property supervisor brings on a brand new proprietor or regulation agency they need to request a W-9 kind. The W-9 kind provides you with their submitting standing and federal tax ID, so you possibly can file your 1099-MISC types precisely when the time comes.

Property managers are required to request a W-9 from and concern a 1099-MISC kind to every proprietor, legal professional, and contractor they work with, as long as funds meet or exceed the $600 threshold. The IRS makes (usually small) changes to the 1099-MISC kind annually. For 2022, the shape seems like this:

1099-misc for property management

What Is a 1099-NEC kind?

In 2020, the IRS started requiring companies to report non-employee compensation in a separate kind, the 1099-NEC. We’ve created an in depth breakdown of the shape and what it means for property managers right here, however right here’s the fundamentals of what you must know:

Property managers should file a 1099-NEC once they pay an unincorporated unbiased contractor $600 or extra in a yr for work achieved on a rental property proprietor’s behalf or instantly for the supervisor’s personal enterprise. You’ll must ship a 1099-NEC as a substitute of a 1099-MISC if you happen to made a cost:

  • Of no less than $600 to a person or group in the course of the yr
  • To anybody who isn’t an worker (this may be a person, a partnership, an property or, in some circumstances, an organization)
  • For providers supplied as a part of your enterprise (together with to authorities businesses and nonprofit organizations)

For property managers, these standards usually boil right down to funds made to:

  • Upkeep suppliers equivalent to landscapers, plumbers, and HVAC professionals
  • Service suppliers equivalent to locksmiths, laundry and dry cleansing, or health instructors

It’s all the time a really useful apply to seek the advice of a tax skilled if you happen to’re uncertain whether or not a specific cost falls into the appropriate class for a 1099-NEC. To offer you an concept of what to anticipate, the shape for 2022 seems like this:

1099-nec for property management

1099 Exemptions for Property Managers

There are just a few eventualities during which property managers are exempt from submitting a 1099. As talked about earlier, 1099s aren’t required for any funds lower than $600.