Property Management taxes

[Bob Stein]

Hi.

I have a small property management company. The tenants pay the rent to my company, the company pays all expenses and repairs and then gives the owner their cut minus the commission. For example, yearly rent is 10k, my commissions are $500, repairs are $500 and i send the owner 9k.

Does 10k, 9500 or 9k go on the owner's 1099?
What is my business gross income: 10k or 500?
If its 10k, i apparently expense the 500 in repairs. What box does the owners 9k go in?

Thanks

[Michael Plaks]

@Bob Stein

You send the owner a 1099-MISC for $10k, Box 1 - Rents.

On your taxes, if you're using Schedule C, Line 1 reports $10,000. Then you subtract $9,500 to arrive to $500. Where $9,500 is subtracted is debatable. I recommend Line 2.

Do not put $500 on Line 1 if you do not enjoy dealing with the IRS inquiries.