Question

As a realtor, I often rebate part of my commission to buyers. My 1099 is for the income I received (after deducting the rebate).Can I still claim the rebate on my taxes?

Forum|Forum|7 years ago
June 4, 2019
2 replies
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For example, if I received $4050 in commission but rebated $1050 toward buyers closing costs (disclosed on settlement statement), I only got a check for $3000 at closing. The $3000 was the only amount included on my 1099. Can I still claim the $1050 as a rebate?

TurboTax Self Employed Online

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Zbucklyo

Employee

No, because you would be claiming an expense that was never included in your income. You'd have to include the rebate in income for you to be able to expense it. Here's the alternative way, which amounts to exactly the same thing: Commission income $4,050, commission rebate $1,050, net income $3,000.

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Honda0810

Hi I have a great question in connection to previous question

What 1099 form should would we use when providing a credit rebate to home buyer ? My commission check was $4000 and title company didn't apply $3000 toward the closing cost disclosure so I wrote a check to buyer after. What form should they fill out ?

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TomD8

Employee

@Honda0810 — No 1099 is issued to a buyer who is given a commission rebate. That’s because a commission rebate is not considered taxable income to the buyer. It is instead considered an adjustment in the price of the home. When the buyer sells the home in the future, he should subtract the rebate amount from his cost basis in the property.

**Answers are correct to the best of my ability but do not constitute tax or legal advice.

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schervinskis

Employee

Love this topic. What if I’m the broker and buying my own property? If I rebate the commission to my own closing costs, do I get 1099 on the portion applied to closing?

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TomD8

Employee

Yes, because the funds you used to pay the closing costs are drawn from from the listing broker's portion of the commission. Therefore the 1099-MISC you receive from your listing broker must include that amount.

**Answers are correct to the best of my ability but do not constitute tax or legal advice.