The $600 1099 Rule Is Now a $2,000 Rule: What Out-of-State Landlords Should Change Before January
If you own a rental two time zones away, most of your money leaves your account as payments to other people: a handyman, a lawn crew, a turnover cleaner, a property manager. Starting with payments made in 2026, the federal paperwork threshold that governs those payments changed for the first time in decades — from $600 to $2,000.
The change is easy to misread in both directions. Here is what actually happened, and what an absentee owner should do before the January filing window opens.
The fact: the threshold moved to $2,000 for payments made after December 31, 2025
Section 70433 of Public Law 119-21 raised the information-reporting threshold under Internal Revenue Code §6041 from $600 to $2,000. The IRS has now built it into the forms. The current Instructions for Forms 1099-MISC and 1099-NEC (Rev. December 2026) state that “for tax years beginning after 2025, the minimum threshold amount for reporting certain payments required to be reported on certain information returns and/or perform backup withholding on those payments increased to $2,000 and may be adjusted for inflation beginning in calendar year 2027.”
In practice, for payments you made during calendar year 2026 and report in early 2027:
- Form 1099-NEC (services performed by a non-employee — your contractor, cleaner, handyman): reportable at $2,000 or more for the year, instead of $600.
- Form 1099-MISC box 1 (rents): same $2,000 floor.
- Attorney gross proceeds stayed at $600, and royalties stayed at $10. The $2,000 figure is not a universal “new 1099 rule.”
A separate provision moved Form 1099-K back to its pre-2021 threshold: a third-party payment platform reports only when gross payments to a payee exceed $20,000 and the transaction count exceeds 200. Treasury and the IRS issued proposed regulations in January 2026 conforming the backup-withholding rules for those platform payments to the same numbers.
The misconception: “so I don’t have to track small vendor payments anymore”
That is the wrong lesson, for three reasons.
1. The threshold is annual and cumulative, not per-invoice. A $450 plumbing visit in March, a $700 water-heater swap in June and a $900 make-ready in October is $2,050 to the same vendor — over the line. You cannot know that in December unless you tracked it in March. Remote owners are the most exposed here, because their spending is spread across several small local vendors rather than one in-house crew.
2. A 1099 threshold is a reporting rule, not a deduction rule. Whether an expense is deductible has never depended on whether a 1099 was issued. Your records still have to support what you claim, and a higher paperwork floor does nothing to change that.
3. The threshold does not decide whether the rule applies to you at all. §6041 reporting attaches to payments made “in the course of a trade or business.” Congress briefly required all rental-property owners to file 1099s for their rental expense payments in 2010, then repealed that expansion in the Comprehensive 1099 Taxpayer Protection Act (Public Law 112-9, §3, retroactive to payments after December 31, 2010). Since then, whether a small landlord is in a trade or business is a facts-and-circumstances question that turns on the scale and regularity of the activity — which is exactly the kind of question to put to your own tax professional rather than to a blog post.
Interpretation, not fact
Our read: the practical effect for a one-to-four-property remote owner is smaller than the headline suggests. The number of 1099s you might send drops, but the underlying job — know who you paid, how much, and have their taxpayer information on file — is unchanged. The real risk is treating a higher threshold as permission to stop collecting vendor paperwork, then discovering in January that a vendor crossed $2,000 and will not return your calls.
The property-manager wrinkle absentee owners actually hit
If a property manager collects rent for you, the IRS instructions are explicit: payments of rent to a real estate agent or property manager are not reported by the tenant or payer, but the manager must use Form 1099-MISC to report the rent paid over to the property owner (see Regs. §1.6041-3(d)). So you should expect a 1099-MISC from your manager for the gross rents they remitted — typically gross of their fee and of repairs they paid on your behalf. If you have never reconciled that form against your own income figure, this is a good year to start; a mismatch is a common source of IRS notices. If you are still choosing a manager, our guide on how to hire a property management company covers what to ask about reporting and statements.
A five-step checklist before January
- Pull a 2026 vendor list now, not in January. Sort by total paid per vendor for the year to date and flag anyone at or near $2,000.
- Collect a Form W-9 from every vendor at first payment, whatever the amount. Getting a taxpayer ID from a contractor you have already paid is far harder than getting it before you pay.
- Ask your property manager, in writing, which payments they report and which they leave to you. Duplicate 1099s to the same contractor are as messy as missing ones.
- Note the deadlines. Form 1099-NEC is due by January 31; Form 1099-MISC by February 28 on paper or March 31 electronically. Anyone filing 10 or more information returns in total must file electronically.
- Confirm the 2027 number later. The $2,000 threshold may be adjusted for inflation beginning in calendar year 2027, so do not hard-code it into your bookkeeping template.
If you are still deciding whether long-distance ownership fits your temperament and systems, start with is out-of-state real estate investing for you? and our walkthrough on managing an out-of-state rental by yourself. And if you hold your property in an entity, this year also brought changes to federal entity reporting — see our note on the two federal reporting rules that stopped applying to LLC-owned rentals.
This article is educational information for rental property owners and is not financial, tax, legal, or investment advice. Reporting obligations depend on your specific facts, entity structure and state rules. Verify current requirements with the IRS and consult a qualified tax professional before acting.
