If you're a rental property owner, you'll get a 1099 form if you have at least one commercial tenant who paid you at least $600 during the year.
That's not the end of the story, though. Let’s break down exactly what kind of 1099 forms to expect and what they mean for your taxes — with plenty of examples.
(Wondering if you need to file a 1099 for your rental property? We’ve got an article that’ll cover that, too!)
Who gets a 1099 for rent?
Landlords and real estate investors will get 1099-MISC forms for rent if they:
- ✓ Collect at least $600 in rent from commercial tenants in a single tax year — including for equipment
- ✓ Get paid through check, ACH, or cash
- ✓ Are taxed as sole proprietors or partnerships
You might also get a 1099-MISC if you:
- ✓ Collect at least $600 in rent from tenants on a government housing assistance plan
Note: The only tenants who file 1099-MISCs are the ones renting commercial space. But you'll still get a form for a residential property if you rent it to someone on Section 8 or a similar program. (The 1099 would come from the government — not your tenant.)
You’ll get a 1099-K instead of a 1099-MISC if you:
- ✓ Get paid through credit card, Venmo, PayPal, or another third-party app
- ✓ Collect at least $20,000 in commercial rent for the year
- ✓ Have at least 200 separate transactions
Note: You might get another kind of 1099 for payments other than rent (which we’ll cover later). Ultimately, whether or not you get a 1099 is based on:
- How much income you earned
- Whether your tenant’s payments count as business-related
- How your business is taxed
Let’s go over all of these factors in detail.
Factor #1: How much income did you earn?
You’ll need to earn $600 during the tax year to get a 1099. The type of 1099 you get depends on both:
- How your tenants paid you
- Whether they paid you for any services other than housing
Getting 1099s for services other than rent
Some housing providers offer other, paid services to their tenants, like A/C installation. If that’s you, you might get a 1099-NEC for “nonemployee compensation” — essentially, working for your tenants as an independent contractor. Both commercial and residential tenants will give you 1099-NECs for services rendered.
Here’s how the types of forms break down:
- For $600 or more in commercial rent payments: 1099-MISC
- For $600 or more in other paid services: 1099-NEC
- For selling goods: No 1099
There’s one possible exception to the “no 1099 for selling goods” rule. If you sell $20,000’s worth of goods and make at least 200 sales, you’ll get a 1099-K.
If you do offer additional paid services, you’ll have to pay self-employment tax on what you earn. To avoid giving the IRS more than your fair share, write off what you spend to keep your services running. That means everything from your tools to the gas fill-ups that take you from house to house.
Keeper can automatically scan your transactions and deduct all sorts of business expenses you may not think of — getting you a lower tax bill.
Getting multiple 1099s as a property owner
Let’s say you own a two-story building. Your tenants are:
- A bakery renting the commercial space on the ground floor
- A grandmother and her granddaughter renting the apartment above it
They both want new A/C installed, so you pick up the units and get them running. You charge $600 for each of the units, plus another $600 apiece to install them. They pay you through direct deposit.
In this situation you’d get:
- ✓ 2 1099-NECs for A/C installation services — one from the bakery and one from the grandmother
- ✓ 1 1099-MISC for commercial rent from the bakery
- ✘ No 1099-MISC for residential rent from the grandma
- ✘ No 1099s of any kind for selling the A/C units themselves
Now, let’s take a closer look at why the bakery has to send you a 1099-MISC for rent, but the grandmother doesn’t.
Factor #2: Do your tenants’ rent payments count as business-related?
We’ve mentioned that only commercial tenants issue 1099s. That's because 1099s are only required for business activity.
You might wonder, “Isn’t everything related to my real estate business, well, business?” But the “business activity only” requirement is from the payer’s perspective.
That’s why the grandmother won’t file a 1099 in our example above. She’s not engaged in a business transaction — she’s just making sure she and her granddaughter have a place to live.
But what if some tenants mix business and personal?
Will you get a 1099-MISC from a tenant who works in your residential property?
No, you won’t get a 1099-MISC from a residential tenant, even if they’re self-employed and running a business from home. So for 1099 purposes, there’s no need to figure out whether your residential tenants plan on working in their apartments.
Now, let’s talk about the last factor behind whether you’ll get a 1099: your business’s tax classification.
Factor #3: How is your business taxed?
Even if you earned $600 and only have commercial tenants, you’ll only get a 1099-MISC if your real estate business is taxed as either:
- Sole proprietor
That’s true whether or not you have an LLC. (Since it’s a legal designation, not a tax designation, LLCs can be taxed as sole proprietorships or partnerships, depending on how many members there are.)
S corps — and LLCs taxed as S corps — don’t get 1099-MISCs.
Providing your tax classification to tenants
How will tenants and clients know how you’re taxed? When you send them your W-9, you’ll check a box on line 3 to indicate it.
It’s good practice to send a Form W-9 to all your commercial tenants when you collect their first rent payment. Some will forget to ask for one before tax season.
To fill it out, here’s all you’ll need:
- Your name
- Your tax classification
- Your address
- Your tax ID — either your employer identification number (EIN), Social Security number (SSN), or individual tax ID number (ITIN)
Once you send your W-9s out, here’s who to expect your forms from.
Who will you get your 1099s from?
Your 1099 forms won’t always come directly from your tenants:
- Your tenants: If you manage your own commercial property and are getting a 1099-MISC
- Your property manager (or property management firm): If you use an external company to manage your commercial property and are getting a 1099-MISC
- The government: If you rent to Section 8-eligible tenants and are getting a 1099-MISC
- Your payment processor: If you’re getting a 1099-K
When will you receive a 1099 for rent?
You’ll get your 1099s by January 31st if you’re receiving them electronically. If they’re being mailed out, expect them by early February.
Note: The IRS requires all 1099 forms to be sent out by January 31st. But they might get to you a little later. (Here's what to do if you don't receive a 1099 at all.)
How will the IRS know if you’ve received rental income?
The IRS receives a copy of all the same 1099s you do. So it’ll expect you to pay taxes on all of the income that’s reported.
Needless to say, the IRS takes a dim view of people who underreport their income. To avoid audits and penalties, include all the income from your 1099s when you file taxes — plus any income you don’t have 1099s for.
You’ll report this income on line 3 of your Schedule E. (If you have more than three properties, you can fill out extra copies of Schedule E.)
Will you get Form 1099-MISC for this situation? 6 examples
All this abstract information can get confusing. So let’s break down 1099-MISC rules for six different scenarios, so you can find the one that’s most relevant to you.
Example #1: Renting to tenants who run a business from home
Situation: You’re a property owner who rents a three-bedroom house to a family of three for $21,000 a year. The parents run an Etsy store from home, selling handmade, fandom-themed candles. They use the third bedroom as their workshop and store their supplies and inventory in the pantry.
Will you get a 1099-MISC?
You earned well over $600. but you’re renting out a single-family home. The parents’ payments count as personal rather than business-related — even if they do work from home.
Example #2: Renting a vacation home through a third-party service
Situation: You own a tiny home on a lake and rent it to vacationers through Airbnb. You earned $20,000 last year.
Will you get a 1099-MISC?
Instead, you’ll get a single 1099-K from Airbnb. The platform operates as a third-party payment settlement entity, similar to Venmo or a credit card processor. So they’ll be responsible for sending you your form.
Example #3: Renting to commercial tenants as a corporation
Situation: You’re a rental property owner with a business taxed as an S corp. You rent office space to an attorney for $18,000 a year.
Will you receive a 1099-MISC?
Although you received more than $600 in rent, and it was business-related, your tax classification means you won’t get a 1099-MISC.
Example #4: Renting to commercial tenants as an LLC
Situation: You’re a property owner with a single-member LLC. You haven’t elected to be taxed as an S corp. You rent office space to a tattoo parlor that pays you $30,000 a year, sending you a check in the mail every month.
Will you receive a 1099-MISC?
You’ll get a 1099-MISC, since your client sent you more than $600 in business-related payments and your LLC is taxed as a sole proprietorship.
Example #5: Renting to commercial tenants through a property manager
Situation: You’re a property owner with an LLC taxed as a sole proprietorship. You use a property management firm to oversee the five local businesses renting office space in your building.
Will you get a 1099-MISC?
You’ll get one 1099-MISC from your property management firm — not five separate ones from your tenants.
Example #6: Renting out commercial equipment
Situation: You run a small business renting out copy machines to local offices. Your average client pays you about $6,000 for the year, through direct deposit.
Will you get a 1099-MISC?
You’ll get a separate 1099-MISC for every client who paid you at least $600. And if you service the equipment as well, you’ll also receive a 1099-NEC for the labor involved.
Now you know how to deal with all the rules, exceptions, and red tape that come with collecting 1099s for rent. Armed with this knowledge, you can sit back and passively collect your rent, knowing your taxes are covered.
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