If you own Los Angeles rental property the IRS are going to want their share.
Even if you are a casual investor in Los Angeles rental property as of the beginning of 2011 any payment made to vendors over $600 must be followed with a 1099. Owners of larger Los Angeles properties have had to do this for many years, but when the 2010 Small Business Jobs Act (H.R. 5297) was enacted it extended the requirement to owners of any rental property.
What do you need to get from your vendor?
Any vendor who has worked on your Los Angeles rental property, and has been paid in excess of $600, needs to provide you with their name, address, and tax identification of Social Security No. Keep a record on the amount you have paid them and at the end of the year issue a 1099 for that amount.
Are their any exceptions?
- If complying with the requirements causes you a hardship.
- The rental is a temporary rental of your own property.
- The income from your rental does not meet the minimum income threshold.
The information on the second two points is not yet out. So stay tuned.
Who are defined as vendors?
Independent or freelance workers who provide real estate-related services: plumbers, painters, landscapers, etc. People who don’t receive a W2 from you and to whom you have paid more than $600 over the course of the year. It does not have to be at one time, so keep track of what you pay, and if at the end of the year it exceeds $600, the out comes the 1099.
There are penalties for filing late. You can get a 30-day extension for filing your forms with the IRS, but your vendors need to receive them on time, usually by the 31st of January, in order for them to do their taxes.
If you are the managing small Los Angeles rental property make sure the owner knows about this new law.
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