How do I account for wholesaler costs - 1099 vs depreciation

Question

I'm buying a property through a wholesaler. My understanding is that the sales price will be recorded as the price paid to the seller, and the wholesaler fee is coming out of pocket as a separate transaction.

Do I need to get a W9 and give the wholesaler a 1099 to account for the taxes? I don't want a 5 figure fee that cannot be depreciated or deducted as a cost of business.

Wayne Brooks · Answer

Yes, unless it is distributed through the title company(it’s part of what you pay the title company, not paid directly to the wholesaler) and on your closing statement.

Steve Morris · Answer

"I'm buying a property through a wholesaler. My understanding is that the sales price will be recorded as the price paid to the seller, and the wholesaler fee is coming out of pocket as a separate transaction."

You sure? Be kinda like buying a property with a legitimate broker and then have the sales price recorded as price less the commission?

Next time, just call the seller directly and tell him you'll give him more than the wholesaler. You'll both sleep better at night. :)

Heidi Ewing · Answer

Thank you!

How do I account for wholesaler costs - 1099 vs depreciation

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