Property Management Brainstorm
Five Minute Friday #11 - Tax Implications of a Rental Property
Jan 3, 2020 · 6 min
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As with any earnings, the rental income a property owner brings in must be reported to the IRS. So, what do property managers and homeowners need to know about reporting rental income and expenses on their federal and state tax returns?

On this edition of Five Minute Friday, Bob offers an overview of the tax implications of owning a rental property. He describes the landlord or property manager’s role in keeping accurate records, discussing the most common methods for tracking income and expenses and explaining what information is included on the 1099 North County Property Group submits to both the property owner and the IRS.

Bob weighs in on why the gross rental income listed on the 1099 differs from the total of owner distributions and walks us through the most common landlord deductions. Listen in to understand California’s requirements for out-of-state property owners and learn how an accountant uses the information provided by a property manager to prepare the owner’s federal and state returns.

Topics Covered

[1:02] The landlord or property manager’s role in keeping accurate records and supporting documentation for a rental property

[1:17] The most common methods for tracking income and expenses

[1:55] Submitting a 1099 that reflects gross rental income to both the property owner and the IRS

[2:14] Why the gross rental income listed on a 1099 doesn’t match the total of owner distributions

[2:41] Providing a year-end owner statement in parallel with the 1099

[2:50] How an accountant translates this information to the property owner’s federal tax return

[3:03] Why most landlords file a Schedule E as part of their Federal 1040 Tax Return 

[3:27] The most common landlord deductions

[4:06] The importance of saving receipts associated with landlord deductions

[4:11] Leveraging a tax-deferred 1031 Exchange to purchase additional properties

[4:37] California’s requirement for out-of-state owners to submit 7% of rent collected to the California Franchise Tax Board

[4:59] Why out-of-state property owners receive both a 1099 and 592-B

[5:16] The tax preparers responsibilities around the California State Return

[5:24] Bob’s advice on consulting with a professional tax advisor

Connect with Bob 

North County Property Group

Resources Mentioned

Microsoft Excel

Quicken

Quickbooks

Federal Tax Forms

California State Tax Forms

This episode is always available for listening, sharing, or download at Property Management Brainstorm. Subscribe to Property Management Brainstorm on Apple Podcasts, Google Play Podcasts, Stitcher, Spotify, and YouTube.

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