Did you know that nearly 72% of real estate properties are owned by individual investors in the United States?
With so many individuals owning real estate properties, people may be wondering what they do with the rent that they collect. Well, it counts as income and it will be taxed accordingly.
This means filing tax statements and 1099s.
What do you need to know about this? Our guide goes over the key factors.
Minimum Income
According to the IRS, the minimum amount of income required for you to file a 1099 form is $600 per calendar year. Considering that this should only take a week or two for you to collect in rent, that means you will likely have to fill this form out.
Taxes
The next thing you have to keep in mind is how much taxes you have to pay. Because you are a property owner in this situation, the income you make from the property does not automatically get taxed. Instead, the IRS asks that you submit your estimated taxes every quarter.
How much money you get taxed depends on how much income your property is making. If it is barely treading water, you may not need to send any taxes at all. However, if your property makes six figures every month, you are likely going to have to pay tens of thousands of dollars in income taxes.
This also depends on what state you live in. Every state has different income taxes and property taxes that you have to comply with.
You have to check what income tax bracket you fall under for Oregon. Also, you will need to prepare for any property taxes you are responsible for.
Deductions
Another important thing to note is what type of tax deductions you may be eligible for. This depends on your personal circumstances, but doing your homework on this could save you money on taxes.
What does your personal office look like? Did you buy your property within the calendar year? What kind of maintenance expenses did you have? How about depreciation?
These are all things that can impact both your net income and what taxes you owe on that. Depending on your circumstances, you could receive special deductions as an individual property owner.
Assuming that you are not an accountant, it can be difficult to discover all of these deductions on your own. You will need to talk to a tax professional about this.
Learn More About Tax Statements and 1099s
When tax season comes around, you are going to have to fill out tax statements and 1099s to make sure that you legally comply with the IRS. You have to consider how much income you made from the property in a calendar year as well as what type of deductions you are eligible for.
Luckily, Kerr Properties is here to help you. We have been a property management provider for over four decades. Our company specializes in property management needs for 14 cities in the Oregon area.
Do you need help with your investment property? Message us here today.
