1099 MISC Tax Requirements for Property Managers

Property Managers are required to report rents collected on behalf of their property owners as part of their rental property accounting and therefore the natural question that arises is the need for the filing of form 1099 MISC for their owners.

According to the instructions for Form 1099 MISC payments of rent to real estate agents is exempt but the real estate agents may use Form 1099 –MISC to report the rent paid over to their property owner.

Those property managers who are maintaining real estate accounting are required to report the rents collected on behalf of their property owners on Form 1099-MISC (Miscellaneous) which is an international form used to report specific payments from an individual, business, or organization to another person or entity.

This form is filed with the Internal Revenue Service (IRS) and in some cases to state tax departments.

Who needs to file Form 1099-MISC

The following entities or individuals are required to file Form 1099 MISC:

Property Owners – Property managers are required to submit Form 1099 MISC to report rent in excess of $600 paid to the property owner during the particular tax year as part of the rental property accounting.

Independent contractors – Property managers must report funds spent over $600 paid to any service providers or unincorporated vendors that include (when preparing their real estate accounting books) entities/individuals such as:

  • Plumbers
  • Carpenters
  • Repairmen
  • Gardeners
  • Attorney fees for managing evictions and for collecting unpaid rent (including legal services provided by the corporation)
  • Landscapers

Property managers when submitting Form 1099 – MISC should report gross rents. This means that they should not deduct their management fees or any repairs or maintenances expenses as the rental property owner would deduct these expenses on their Schedule E.

Property managers should also provide their owners and vendors with Form 1099-MISC by January 31st. They should submit the copies of the Form 1099-MISC to the IRS by February 28th.

As a property manager, you should check the deadlines for each year as these deadlines may vary per year. Failing to file Form 1099-MISC involves heavy penalties that are quite expensive.

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