: Can I deduct money I paid to a friend to help rent out my condo? On this IRS page it says you can deduct management fees related to renting a property. Does this only apply to professional property managers or management

Vote Up Vote Down   0 Reactions

Login to give Reaction!

There's nothing illegal in hiring your friends to manage your property or provide you services, and it is definitely deductible. There's nothing specific to reference here, this is a standard deduction for a landlord just as any.

I mentioned 1099 in the comments - if the total is over 0 and your friend is not a corporation, then you should issue 1099. That would provide you the necessary substantiation of the deduction (of course you need to keep some documentation that shows the relation between the money paid and the services provided, like a contract, or invoice or receipt).

You can (but don't have to) issue 1099 for lower amounts as well. If you don't - you'll need to keep more documents as substantiation - cached checks, documents about the agreement and the amounts, etc. In addition, your deduction may be disallowed if your friend doesn't declare this as taxable income (issuing 1099 helps here since your friend will be forced to declare it, otherwise it will be recorded as a mismatch by the IRS and trigger an audit).

As to reimbursements - that would go into the same bucket. They'll have to deduct their expenses from that income on their own taxes. So if you give them 0 for the work, 0 for the miles, and 0 for the materials they bought - you issue the 1099 for 0, and let them deduct the 0 on their own Schedule C.