January 1st, a new law took affect that requires rental property owners to submit additional accounting records to the IRS. This comes as a provision of the Small Business Jobs Act passed by Congress that dictates that rental income be in the same tax category as a business or trade. You are required to complete an information return (typically, Form 1099-MISC) to the vendor and IRS if paying $600 or more to a service provider while receiving rental income.
If you are planning to have some maintenance done to your building this year, you better keep those receipts! Fines range from $60 to $250,000 for not providing these detailed tax documents.
Many landlords are very upset by this new ruling. Vice President of Yorke Property Management, Jeffery Yorke, comments that “we are already enslaved to the IRS with endless and mindless paperwork that takes us away from our main business of property management. This new rule obligates us to still more outrageous record-keeping and steeper accounting costs.”
What measures are you taking to keep accurate records for tax season?