In the past, only landlords whose rental activities qualified as a business were required to file Form 1099s with the IRS. However, starting in 2011, all landlords must comply 1099 reporting requirements, including those who are considered investors (not landlords) for other tax purposes. However, there are some important exceptions to this new rule. Investor-landlords who fall into one of the following groups are exempt from the new 1099 reporting requirements:
- landlords who obtain substantially all of their rental income from renting their principal residence on a temporary basis
- landlords whose annual rental income is less than a minimum amount (to be established by the IRS), and
- other investor-landlords for whom complying with the reporting requirements would cause hardship. The IRS will adopt regulations providing guidelines on what constitutes a hardship.The IRS can impose monetary penalties on landlords who fail to comply with the reporting requirements. The penalty is $250 for each 1099 you intentionally fail to file. The penalty is less if the failure is not intentional, ranging from $30 to $100, depending on how quickly you fix the error.