Form 1099 for Rent: New 1099 Filing Requirements for Rental Income

Which 1099 Forms are Used to Report Rental Income?

Based on how the rental payment is made, two different types of 1099 forms are filed to report those payments to the IRS. Here’s how it applies:

• Form 1099-MISC: If you're a commercial tenant paying $600 or more per year in rent to your landlord, you are required to file a Form 1099-MISC to report this payment to the IRS. Non-commercial tenants are not required to file Form 1099-MISC.
• Before filling a 1099, first, you must collect Form W-9 from your landlord or property manager to obtain the correct taxpayer identification information, such as their name, address, and TIN such as SSN or EIN.

  Example: If a small business rents office space in your building and pays $800 per month, totaling $9,600 for the year, the small business will issue a Form 1099-MISC to the landlord at the end of the year.

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• Form 1099-K: Form 1099-K reports payments made through online transactions, such as payment cards, online payment apps, and online marketplaces. For the 2025 tax year and beyond, payment processors are required to issue Form 1099-K only if total payments exceed $20,000 and there are more than 200 transactions within the year.

  Example: If you sell handmade crafts through an online marketplace and receive $22,000 in total payments across 250 transactions during the year, you will receive a Form 1099-K because your payments and number of transactions exceed the IRS reporting threshold for 2025.

What Types of Income Are Considered Rental Income?

Rental income includes any payments from tenants in exchange for using your property. This can encompass a variety of payments, such as:

• Monthly Rent: The most straightforward form of rental income is the monthly rent payments from tenants to landlords.
• Security Deposits: Security deposits collected from tenants to cover potential damages can also be considered rental income if not returned to the tenant.
• Additional Fees: Any extra fees charged to tenants for specific services or amenities, such as parking fees, pet fees, or late payment charges, are considered rental income.
• Lease Cancellation Payments: If a tenant terminates their lease early and pays a fee, this fee is also considered
  rental income.
• Tenant-Paid Owner Expenses: If tenants are responsible for paying certain property expenses directly to the landlord, such as utilities or maintenance costs, these payments are considered rental income.
• In-Kind Payments: If a tenant provides goods or services in exchange for reduced rent, the fair market value of these goods or services is considered rental income.

How is Rental Income Taxed for Landlords and Property Managers?

Rental income is subject to taxation and must be reported to the IRS at the end of the year, regardless of the source. This includes income from properties rented out for commercial purposes on a monthly or yearly basis.

To determine your taxable rental income, subtract any allowable tax deductions from your total rental income. These deductions include mortgage interest, property taxes, insurance, maintenance, and depreciation. The remaining amount after deductions is your taxable income, which will be taxed at your current income tax rate.

For example, if you rent a property for $1,000 per month, you will earn $12,000 annually. After subtracting allowable deductions, the resulting amount is your reportable taxable income, which will be subject to taxation at your current rate.

In addition to regular rental income, other sources of taxable income may include fees for services like parking, deductions from tenant deposits for damages, lease cancellation payments, or tenant-paid owner expenses.

What Should Landlords and Property Managers Do with 1099 Forms?

As a landlord or property manager, here’s how you handle 1099 reporting:

• Receive Your 1099: Track rental payments from your commercial tenants. If a business pays you $600 or more in rent, they must issue a Form 1099-MISC. Ensure you provide them with your TIN using Form W-9 so that they can use that information to file a 1099 for you.

  If the rental payment was made through a third-party payment processor, you’ll receive a 1099-K from the
  respective entity.

• Report Income on Your Tax Return: Ensure all rental income received aligns with the 1099 forms. Landlords are typically required to report rental income on Form 1040 (Schedule E).

Note: If a landlord or property manager hires independent contractors (e.g., repair services, landscaping, or cleaning) and pays $600 or more, those payments are reported on Form 1099-NEC. Therefore, if you’ve paid independent contractors or vendors $600 or more, you must file a Form 1099-NEC.

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