Do I Need to File a 1099 for Business Property Rental?

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If you run a business, declare your rental expenses on a 1099-MISC form.
If you run a business, declare your rental expenses on a 1099-MISC form. (Image: Creatas/Creatas/Getty Images)

The 1099 form is one of several information forms the Internal Revenue Service, or IRS, provides to keep track of your business transactions. Of the 12 different 1099 forms, the one that you use to declare payments to contractors, royalties and rental income and expenses is 1099-MISC. If you run a business, you must declare your rental expenses, with some exceptions; however, if you rent as a business, you are not required to declare expenses.

1099-MISC Filing Requirements

If you operate a business, the government requires you to file a 1099-MISC form if you made royalty payments of $10 or more to a single individual or paid $600 or more to a single individual for rents, services, prizes and awards. This form is also necessary if you paid $600 or more to an individual or corporation for health services, fishing activities or legal fees. You must send one copy of the form to the government and another to the recipient of the payments. The recipient must receive the 1099 by January 31 and must declare the amount that you paid as income.

Declaring Rent

If you operate a business and pay rent, the government considers the recipient of that rent an independent contractor in the business of providing rental property. That person must declare the rent received from you as income, provided it is $600 or more. You will need to file a 1099-MISC form to declare the amount of rent you paid. You do not have to file a 1099 if you pay the rent to a corporation or a real estate agent. The recipient of the of the rent must declare it on Schedule E of the federal return.

Rental Expenses

As part of the Small Business Jobs Act of 2010, passed along with the Patient Protection and Affordable Care Act, or Obamacare, the federal government requires landlords who rented property as a business to file a 1099-MISC for payments made in excess of $600 to any contractor who provided services to the rental property. Although effective in January of 2011, Congress repealed the legislation on April 18, 2011. As a result, you no longer have to report expenses paid to contractors on a 1099 form if you own rental property.

Considerations

1099 forms are typically for reporting payments made in the course of conducting business, so you don't have to file one for your rental space if you don't use it for that. This creates a gray area for someone who rents their home and conducts a small business from it. Filing a 1099 may help you balance your business books, but it may cause your landlord consternation unless you have come to a prior agreement about it. Although the law unambiguously requires businesses to report rental expenses on a 1099, it clearly does not require it for personal transactions.

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