I have an LLC and manage rental properties for clients. I am using TurboTax Business Edition for the first time this year and have some questions.I manage 10+ rental properties (some commercial, others residential) for a client and send him a 1099-MISC reporting total gross rental income I collect.I collect all rents into a trust account, from where I pay property expenses (mortgages, etc) and contractors for repairs.I send out 1099-NEC to all the contractors for repair/maintenance work done on the properties.Each quarter, I send the remaining balance minus my management fees to my client, along with a list of detailed expenses for his taxes. I am confused, because it seems like I would have to input income and expenses for each property, as if I owned them, but I do not. Using business edition, how do I report my income (which is really just the management fee)? Do I need to create a listing for each property under "Rental Real Estate" even though I do not own the property?If so, what do I put for gross income and total expenses?Do I need to ask my client for a 1099-MISC to report my management fee?

Question

Property Management Company in Business Edition

Forum|Forum|4 years ago
January 14, 2022
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I have an LLC and manage rental properties for clients. I am using TurboTax Business Edition for the first time this year and have some questions.

I manage 10+ rental properties (some commercial, others residential) for a client and send him a 1099-MISC reporting total gross rental income I collect.
I collect all rents into a trust account, from where I pay property expenses (mortgages, etc) and contractors for repairs.
I send out 1099-NEC to all the contractors for repair/maintenance work done on the properties.
Each quarter, I send the remaining balance minus my management fees to my client, along with a list of detailed expenses for his taxes.

I am confused, because it seems like I would have to input income and expenses for each property, as if I owned them, but I do not. Using business edition, how do I report my income (which is really just the management fee)?

Do I need to create a listing for each property under "Rental Real Estate" even though I do not own the property?
If so, what do I put for gross income and total expenses?
Do I need to ask my client for a 1099-MISC to report my management fee?

TurboTax Business Windows

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ThomasM125

You would just report the management fee you receive as income for services rendered. You can deduct any expenses you incur that you pay out of pocket to generate your fee. The owners of the properties report the rent income and property expenses on their tax returns. The rent money you receive is similar to a loan, that you don't report because it is not income to you.

You report the income as self-employment income, as your income is for the management service you provide, not rental income.

The owners of the properties should send you a form 1099-NEC if your fee is more than $600 for the year, but that is their responsibility, not yours.

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Goro7731Author

Thank you for the reply. But say I'm collecting rent on 5 commercial properties that I do not own. The tenants each send me a 1099-MISC (since they paid rents to me) showing the gross rent they paid.

1. On my taxes, you are saying I do not need to report the 1099-MISC rental income that I received? Is it enough that I issue a 1099-MISC to the owner of the properties for the same gross rental receipts?

There was a similar question posted the other day (from the perspective of the owner), in which the answerer suggested the Owner should not send a 1099-NEC to the Property Management company for the management fee (which is above $600 for the year). Is this true?

Critter-3

If the rent you collect has your name on the checks then it is income to your business even if you put it in a trust account ... then you simply deduct the expenses and the amount you send to the owners which will leave only your income on the return and that is then reduced by your business expenses. It is just that simple ... don't over think it.

And a single member LLC files a Sch C unless you incorporated ... then you file an 1120 or an 1120-S. If you did not incorporate then the TT Business program is not for you.