Saturday, January 15, 2011

New Requirements for Landlords

Q.  Since buying our motor home, we have rented our house while waiting for the real estate market to rebound. While having lunch the other day, the people at the table next to us were talking about all the new reporting rules pertaining to landlords. Can you enlighten me? JN, Iowa

A.  Apparently many RVers are also landlords, as I've had several questions along these lines. Here's the scoop. The Small Business Jobs Act effectively declared real estate as a business for information reporting purposes. Then, along came the Health Care Act, which is trying to eliminate the underground economy. Together, they're going to keep landlords very busy!

This means, that beginning in 2011, for any person or persons whom you pay $600 or more to in the course of the calendar year for services, you are required to report this on Form 1099.  Before actually handing over any money for compensation, have them fill out a W-9 Form. You may need to tell them, no form, no check! This is the new rule for this year. But . . . it gets worse:

Beginning 2012, you must report anyone you pay $600 or more to during the course of a year, (pertaining to your business) a 1099 form not only for services, but for goods and tangible property as well. This is a real headache! The only exception is for payments made by credit card rather than by check or cash. In other words, if the gardener won't accept your credit card, you need to issue them a 1099. Many businesses, of course, are hoping this will be repealed during the year, but I'm not holding my breath! Stay tuned.

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