Here are a couple of points regarding pre-paid/advance rent, we get these questions frequently so we thought we would share why this is included in your 1099. This information derives directly from the IRS website.

Advance rent. Advance rent is any amount you receive before the period that it covers. Include advance rent in your rental income in the year you receive it regardless of the period covered or the method of accounting you use.

Example. On March 18, 2020, you signed a 10-year lease to rent your property. During 2020, you received $9,600 for the first year’s rent and $9,600 as rent for the last year of the lease. You must include $19,200 in your rental income in 2020.

Example #2. On December 31, 2021 your tenant pays rent for January 2022, this is advance rent and must be included in your 1099 for fiscal year 2021.

Additional updates: A residential landlord (property manager) may not charge a late fee until the rent is late by at least 7 calendar days. The late fee is now capped at $50, or 5% of the amount of the past due rent payment, whichever is greater. This also means we can no longer collect daily late fees.

Oh, by the way. If you know someone who is looking to rent, sell or buy a property, please call or email us with their information and we’ll take good care of them!

As always, thank you for your business and continued support!

[email protected]

**Trinity Team Property Management is not a tax attorney/accountant and we’re not offering tax advice.