Roost Realty
IRS

Time to payback Uncle Sam

February 22, 2011 by · Leave a Comment 

I have not seen any reports of how many people took advantage of the first time home buyer tax credits that were available in several forms 2008 – 2010. I wonder how many folks are going to be surprised that Uncle Sam wants some money from them?

Most people would consider the tax “credit” that was available  in 2008 to be more of an interest free loan. Thanks to the Housing and Economic Recovery Act of 2008, buyers that bought after April 8, 2008, and on or before December 31, 2008 were eligible for a one time tax credit in the year of their purchase. Unlike the credits that came in 2009 – 2010 buyers under the 2008 tax credit are required to pay back their credit over a 15 year timeframe.

Exactly how are buyers going to pay back the credit? If the buyer got the full $7500 credit then they will payback $500 per year for 15 years. If the buyer sells their home before the 15 years is up then the remaining balance will be added to their tax liability for that year.

Buyers that utilized the First Time Homebuyer Credit in 2009 & 2010, via the American Recovery and Reinvestment Act of 2009, need not worry. They do not have to repay the credit, provided that they stay in their home for 36 months.

photo by: AJ Cann http://www.flickr.com/photos/ajc1/2799103829/

IRS

Landlords and 1099 reporting

February 12, 2011 by · Leave a Comment 

A new law went into effect for 2011 that affects landlords. All landlords who receive $600 or more in rent for the year must send a 1099 to all service providers that the landlord paid $600 or more during the year, such as plumbers, carpenters, yard services, and repair people.

1099-Misc

Prior to 2011, this requirement had only applied to those involved in full-time property management, but now the requirement covers all types of landlords. As a property management company, Roost Realty has always had to issue 1099’s to our owners for rent collected and also to vendors with whom we spent over $600. Now if you are a homeowner renting out your own home you will be required to do the same.

Starting this year, 2011, you will need to collect federal tax ID numbers from service providers in order to file the 1099s. Failure to file the 1099s with the IRS can result in fines of $50 per 1099 not filed with the IRS. In 2012, these requirements will expand to cover providers of good to landlords.

Luckily, this does not affect our property owners. Since we represent them in the renting of their home then the reporting and 1099 requirements fall on our shoulders.

Mindy

Roost Realty