Tax laws are constantly being revised. As part of our service to our clients, we have summarized the most recent changes for your information. Today, we are discussing real estate reporting.
For all payments made after December 31, 2010, individuals receiving rental property income will be treated as engaging in the business of renting property. Therefore, those individuals will be subject to the same reporting requirements as people engaging in trade or business. One important aspect of this change is that rental income recipients spending over $600 with a service provider (such as a plumber or electrician) in the course of earning rental income, must report that expenditure to the IRS and the service provider.
The rental property expense payment reporting requirement doesn’t apply to:
(1) a person who receives rental income of not more than a minimal amount to be determined by the IRS;
(2) an individual who receives rental income from renting his/her primary residence on a temporary basis; or
(3) any individual for whom the information reporting requirement would cause hardship (to be defined by the IRS).
Please direct questions on this and any other tax planning issues to your office.
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