Laurel, MD · Member since 2017 · 17 posts · 4 votes
I just bought a property that I intend on renting. I am rehabbing it now and I am curious how my expenses for the improvement are captured on my taxes? I ask because I previous asked a question about W9 and 1099 and I am getting conflicting information. It seems that if I did this work as a business than I would need W9 from all contractors and would issue 1099 to all contractors. However, as an individual, am I issuing W9 and 1099 to contractor's or are these expenses just marked as rental expenses or possibly added to increasing the depreciation value through improvements? Some insight would be great. I just started out so I am trying to figure this all out so I know where to keep this information for my records. An please don't just say get a CPA, I know I need to find one. I didn't want that from hindering me form getting started. Thanks for all your help, BP!!
CPA · Raleigh, NC · Member since 2013 · 1k+ posts · 2k+ votes
9y
@Fred Mejias if you are going to be a landlord, you are in a grey area. Technically, there is not an official ruling/requirement for landlords to issue 1099s. However, to cover your bases, you may want to.
In order to issue a 1099, you will need the vendor to provide you with a W9. You do nothing with the W9 except keeping it on file. You do not issue a W9 to the contractors.
The W9 gives you the information you need to issue a 1099 at year end.
The rehab will likely be considered a capital expense and depreciated. There are tricks to get around this which is why you DO need a CPA :)