Many people use rental real estate as part of a diversified investment portfolio for growing family wealth. We explore the issues relating to the ownership of rental properties with clients as we are preparing their wills, trusts and financial power of attorney documents. We are privy to the concerns that these rental property owners voice to their advisors. On the top of the more recent concerns was 2010 Small Business Jobs Act.
Among other things, the 2010 Small Business Jobs Act required landlords to use Form 1099 to report a number of rental property expense payments equal to or greater than $600 made after December 31, 2010 and reported in 2012 and beyond. The requirement applied to virtually all landlords. Reporting requirements would have applied to payments to, among others, contractors, roofers, painters, plumbers, electricians, accountants and attorneys.
Luckily for some landlords in PA and throughout the country, on April 5, 2011 the Senate approved a bill (H.R. 4) to repeal the expanded landlord reporting on Form 1099. The next step is to President Obama for final approval of the repeal. As a result of the repeal of Section 2101 of the 2010 Small Business Jobs Act many landlords need not identify specific expenses for rental property expense reporting. Unfortunately, landlords with rental activities that are considered a trade or business would still likely have to report payments of $600 or more made to service providers.
We suggest reviewing the status of your rental activities as a landlord with your income tax professionals should this appeal be finalized.
You can contact Douglas L. Kaune, Esquire to discuss the most advantageous way to own your rental real estate when considering lawsuit, divorce and creditor protections. We can also assist with the best way to integrate the rental real estate ownership into your will and trust planning.