Here is an educational video showing how the ledgers work together in Rentec Direct to automatically flow transactions to the tenant, property, owner, and bank account ledgers. Rentec Direct automatically takes certain transactions and flows them to the appropriate accounts, such as; A tenant payment received automatically posts as income to the property and any associated owners and bank accounts. As multiple ledgers are concerned for a single transaction, this video illustrates how the process happens.
Earlier this year, a bill named H.R. 5297: Small Business Jobs Act of 2010 amended tax reporting rules for landlords. Section 2101 establishes that, “a person receiving rental income from real estate shall be considered to be engaged in a trade or business of renting property”. Previously unincorporated landlords were not considered a “business” and therefore complicated tax reporting rules that generally only applied to corporations did not apply; however now they do!
While this bill expands government (the IRS specifically) and increases administrative costs to taxpayers to the tune of 3.3 billion dollars per year, its stated intent was to help small businesses. Unfortunately landlords have got caught in a political crossfire and now have a significant new tax reporting burden.
Here’s how to comply. This law takes effect for all payments made after December 31, 2010. Be prepared by following these steps.
Before hiring anyone who may bill for services greater than $600 during the year for their service, have them fill out and provide you with a W9 form. Do not do business with them until they return the form otherwise the IRS has heavy new penalties they will be imposing next year. Retain these forms, or best yet, scan and upload them to your file library for safe keeping.
Retain complete records of all expenses from each service provider (vendor). You are required for 2011 taxes to file a 1099 for any vendor whom you have paid greater than $600 through the year. The easiest way to maintain these records is with good property management software. With Rentec Direct you simply go to the Properties tab, and click Post Expense.
Prior to January 31, 2012 you are required to send a 1099-MISC to the vendor, and by February 28th a copy must be sent to the IRS and State. This is made easy with Rentec Direct’s 1099 assistance. During January 2012 provided all vendor expenses were entered throughout the year, simply click to print your 1099s with no further work to do.
Remember, these rules are for tax year 2011. This means any transaction after December 31st, 2010. CPAs, accountants, and tax preparation firms typically charge from $50 – $100 per form, plus hourly for research to compile information which can cost landlords thousands, possibly tens of thousands in tax preparation costs if you have them do this task on your behalf. By being prepared and following the simple steps above you can eliminate this potentially massive cost in your 2011 tax return.
This video provides a brief demonstration on how to manage tenant deposits. You will get guided through the process of receiving a deposit, tracking deposits, charging against deposits, and finally returning deposits.
To help new Rentec Direct users get started fast, we’ve compiled some video training material. These videos are recorded in HD, so they look best and can be viewed the easiest when viewed in full screen mode. To enter full screen, just click the outward arrows in the lower-right of the video. After reviewing this training material, if you have any questions, pleaseloginand click ‘need help’ in the upper right corner to contact our staff.
Our first video is a quick tour of the basic usage of the software. This is a must see for all new users.
Training Video #2
This video provides a brief demonstration on how to manage tenant deposits. You will get guided through the process of receiving a deposit, tracking deposits, charging against deposits, and finally returning deposits.
Training Video #3
This video will guide you through a detailed training on adding and managing properties within Rentec Direct.
Training Video #4
This video will guide you through a detailed training on adding and managing tenants within Rentec Direct.
Training Video #5
This video will guide you through a detailed training on adding and managing bank accounts and property owners within Rentec Direct.
Training Video #6
This video will show you how to use the reporting system within Rentec Direct.
Training Video #7
This video guides you through the system settings screen and goes into detail on some of the more complex setting options.
Training Video #8
This video will demonstrate the built-in workorder system within Rentec Direct. It will show you how to add and manage workorders and how tenants can post repair requests from their tenant portal.
We’ve added a new report to the system to assist landlords and property managers easily compile all necessary information to provide 1099′s to the IRS, vendors, and owners. Under the Reports tab is the new report labeled 1099 Assistant. Click the image to the right for a full size example of the report.
To use this new report simply enter your expenses and distributions as normal into the system. Any time after January 1st, visit Reports, choose ‘Last Year’ for a date range, and choose the 1099 Assistant report. All your expenses will be summarized with the necessary information to fill out your 1099s quickly available at your fingertips.
A couple tips to make this report the most useful. Be sure to visit Settings, Setup Vendors and have all your vendors defined in the system with complete address and tax id information. Same for any owners you provide distributions to. If the system is unable to match a qualified expense to a vendor or owner it will provide an option to link that payee to an owner or vendor for your convenience.
Along with this we have also improved the auto-suggest feature when posting or editing expenses. While the feature was always very reliable in Firefox, Chrome, and other browsers with excellent Javascript support, we’ve update it to work better for IE now as well. IE users will notice the auto-suggest list, and auto-populate of address fields work much smoother now.
We’ve updated the email notification options to include two new options:
Send copy to Myself
Send copy to Property Owner
These settings will do just as they say and send you (the property manager or landlord) or the property owner a copy of the message(s) going out to tenants. For associations, the same settings hold true for unit owners.
Along with this update we’ve enhanced the look and feel of the email notifications going to tenants and owners. The new email template looks a lot better, while providing a more professional feel.
Additionally, one small change, if a tenant replies to any notifications, the reply will now go to you instead of us. This should help facilitate better communication between property managers and tenants.
Of note, while improving this interface we did locate some small glitches within some tenants settings and we had to reset their settings to defaults (no emails). Please visit your tenant settings and update as necessary, or tenants can also make these changes via the tenant portal.
There are numerous changes coming in 2011 and 2012 for property managers and landlords which affect your tax reporting. It’s important to be prepared with the documentation and records necessary to be able to comply. Rentec Direct’s property management software will provide tools in 2011 to accommodate these laws if they do not get repealed.
2011 Change for Landlords
Earlier this year Congress passed H.R.5297 which expanded reporting requirements for owners receiving rental income beginning in 2011. Specifically, Section 2101 establishes that, “a person receiving rental income from real estate shall be considered to be engaged in a trade or business of renting property.” This change will now require any person who receives rental income to file a Form 1099 for payments of $600 or more in a given year for each service provider. The new requirement does not include purchases of goods. Prior to this legislation, only real estate professionals such as those working in property management were considered to be in the “trade or business of renting property,” and thus required to file 1099 forms with the IRS for these types of payments.
Exemptions were included in the legislation for military/intelligence personnel, those whose rental income is no more than a “minimal amount”, and for those who would experience a “hardship”. The second two exceptions have yet to be properly defined by the IRS.
2012 Change for Property Managers
Earlier this year Congress passed H.R.3590 which is a health care bill that has nothing to do with property managers and business, other than the fact that they slipped in these new reporting requirements for small businesses. This bill expanded reporting requirements for all businesses beginning in 2012. Specifically, it requires the filing of Form 1099 for any business (including independent contractors and those who are self-employed) that makes a payment of $600 or more in a given year to any payee for goods and services. A separate Form 1099 will need to be filed for each payee. Payments to tax-exempt organizations are not included in this new requirement.
There have been several attempts to repeal this 1099 requirement but so far none have been successful. It’s unclear if there will be any further repeal attempts before the end of 2010. Click here for more information from Bloomberg Businessweek on recent repeal attempts.
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A lot of property managers and landlords disagree with these laws as they create an undue paperwork burden and unnecessary work on behalf of private landlords and managers. Some resources are provided below on how to assist in repealing these costly laws.
We’ve had a number of requests from members to be able to customize the look and feel of Rentec. This might be just to improve the inter-office feel and bring in your company logos and slogan into the application, or it may be for the benefit of your owners or tenants when they login to see your information instead of ours. We’re happy to offer custom branding as an “on-demand” feature for all of our members! Note the 2 red boxes in the image below; these are both brand-able with your images or text.
To brand your application for you, your employees, owners, and tenants who might login, follow these steps:
We’ll respond with all necessary information on images to create or provide.
Not a graphic artist? Don’t worry. We have graphic designers standing by to help. You can send us your logo, and tell us your slogan (or other text or image you would like to see on the left), and we’ll take care of the graphic work. Also, as part of the branding you will get your own web address, such as yourcompany.rentecdirect.com, to further personalize the service.
Because there is work for us to get this setup, we do have a small charge to make it happen to cover our time. For Rentec Pro, PM, and Association users, the price is discounted to $45. This option is not available for Rentec Basic.
