Author Topic: Realtor rebate for new house  (Read 1816 times)

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Offline USCTrojanCPA

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Re: Realtor rebate for new house
« Reply #15 on: February 16, 2021, 01:23:52 PM »
is buyer rebates taxable income? If so, is there a way for us to request it to be not taxable (i.e deduct amount from price of home, cover closing costs, etc)?

I have tried multiple times but no new home builder is willing to do a purchase price reduction via broker credit so it all has to be done outside of escrow. With that said this amount is not taxable, especially if your agent does not issue you a 1099-NEC. If your agent does happen to issue you one though, it is a full write off.

No builder has allowed either a reduction to the price or buyer credit towards closing costs with the agent rebate since 2011-2012 (last one that did was Taylor Morrison with Las Ventanas in Portola Springs).  The reasoning I got was that it's really a referral fee and that it is only earned after closing (BS in my opinion but whatever).  I find it funny that builders require agents and buyers sign a broker co-op agreement where one of the provisions states that the agent will not rebate any part of the commission in or outside of escrow.  Yeah ok, good luck enforcing that after the close of escrow.  haha
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Offline sleepy5136

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Re: Realtor rebate for new house
« Reply #16 on: February 16, 2021, 02:22:19 PM »
is buyer rebates taxable income? If so, is there a way for us to request it to be not taxable (i.e deduct amount from price of home, cover closing costs, etc)?

There was a tax letter ruling stating that rebates to buyers, whether they are through escrow or outside of escrow, are not taxble to the buyer.  It's a reduction of cost basis in the home (aka when you sell the home the gain on sale is larger by the rebate amount).  I don't understand why so many agents and/or brokers try to 1099 buyers for the rebate amount so the tax letter ruling was very clear that no 1099 should be issued to the buyer.
Interesting. So in that case, why do they do it? Is it a tax incentive on their end to issue that 1099?

Offline USCTrojanCPA

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Re: Realtor rebate for new house
« Reply #17 on: February 16, 2021, 02:29:55 PM »
is buyer rebates taxable income? If so, is there a way for us to request it to be not taxable (i.e deduct amount from price of home, cover closing costs, etc)?

There was a tax letter ruling stating that rebates to buyers, whether they are through escrow or outside of escrow, are not taxble to the buyer.  It's a reduction of cost basis in the home (aka when you sell the home the gain on sale is larger by the rebate amount).  I don't understand why so many agents and/or brokers try to 1099 buyers for the rebate amount so the tax letter ruling was very clear that no 1099 should be issued to the buyer.
Interesting. So in that case, why do they do it? Is it a tax incentive on their end to issue that 1099?

Why, because they don't know any better and/or too lazy to find out the proper tax treatment....doesn't take much online research to find the answer. They are realtors and think that they have to push it off to the buyer because they don't understand they can take the rebate as a deduction on Line 2 of their Schedule C. Typically you issue a 1099 to vendors (including contractors) so that you can expense the amount on the tax return.
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Re: Realtor rebate for new house
« Reply #18 on: February 16, 2021, 02:35:12 PM »
is buyer rebates taxable income? If so, is there a way for us to request it to be not taxable (i.e deduct amount from price of home, cover closing costs, etc)?

There was a tax letter ruling stating that rebates to buyers, whether they are through escrow or outside of escrow, are not taxble to the buyer.  It's a reduction of cost basis in the home (aka when you sell the home the gain on sale is larger by the rebate amount).  I don't understand why so many agents and/or brokers try to 1099 buyers for the rebate amount so the tax letter ruling was very clear that no 1099 should be issued to the buyer.
Interesting. So in that case, why do they do it? Is it a tax incentive on their end to issue that 1099?

Why, because they don't know any better and/or too lazy to find out the proper tax treatment....doesn't take much online research to find the answer. They are realtors and think that they have to push it off to the buyer because they don't understand they can take the rebate as a deduction on Line 2 of their Schedule C. Typically you issue a 1099 to vendors (including contractors) so that you can expense the amount on the tax return.

From the realtor's standpoint, it is less risk to them for audit if they issue you a 1099 and offload the income to the buyers instead of taking a large write off. So my guess is these guys are just afraid of audit and complications that come with it.

Offline sleepy5136

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Re: Realtor rebate for new house
« Reply #19 on: February 16, 2021, 02:35:58 PM »
is buyer rebates taxable income? If so, is there a way for us to request it to be not taxable (i.e deduct amount from price of home, cover closing costs, etc)?

There was a tax letter ruling stating that rebates to buyers, whether they are through escrow or outside of escrow, are not taxble to the buyer.  It's a reduction of cost basis in the home (aka when you sell the home the gain on sale is larger by the rebate amount).  I don't understand why so many agents and/or brokers try to 1099 buyers for the rebate amount so the tax letter ruling was very clear that no 1099 should be issued to the buyer.
Interesting. So in that case, why do they do it? Is it a tax incentive on their end to issue that 1099?

Why, because they don't know any better and/or too lazy to find out the proper tax treatment....doesn't take much online research to find the answer. They are realtors and think that they have to push it off to the buyer because they don't understand they can take the rebate as a deduction on Line 2 of their Schedule C. Typically you issue a 1099 to vendors (including contractors) so that you can expense the amount on the tax return.
So because I am in the process of buying a new construction home, I cannot have those credits be used towards escrow. So because the credit needs to be done outside of escrow, the agent is saying "its not a reduction in price, therefore we need to give you a 1099". Is this correct? I'm not able to find anything that says this.

Offline Cares

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Re: Realtor rebate for new house
« Reply #20 on: February 16, 2021, 02:49:55 PM »
is buyer rebates taxable income? If so, is there a way for us to request it to be not taxable (i.e deduct amount from price of home, cover closing costs, etc)?

There was a tax letter ruling stating that rebates to buyers, whether they are through escrow or outside of escrow, are not taxble to the buyer.  It's a reduction of cost basis in the home (aka when you sell the home the gain on sale is larger by the rebate amount).  I don't understand why so many agents and/or brokers try to 1099 buyers for the rebate amount so the tax letter ruling was very clear that no 1099 should be issued to the buyer.
Interesting. So in that case, why do they do it? Is it a tax incentive on their end to issue that 1099?

Why, because they don't know any better and/or too lazy to find out the proper tax treatment....doesn't take much online research to find the answer. They are realtors and think that they have to push it off to the buyer because they don't understand they can take the rebate as a deduction on Line 2 of their Schedule C. Typically you issue a 1099 to vendors (including contractors) so that you can expense the amount on the tax return.
So because I am in the process of buying a new construction home, I cannot have those credits be used towards escrow. So because the credit needs to be done outside of escrow, the agent is saying "its not a reduction in price, therefore we need to give you a 1099". Is this correct? I'm not able to find anything that says this.

We cannot tell your agent how to handle his personal tax situation. USC and I both do it the same way where we give the buyer a rebate and we do not issue a 1099. He needs to consult with his CPA on how to handle his taxes.

Offline USCTrojanCPA

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Re: Realtor rebate for new house
« Reply #21 on: February 16, 2021, 02:53:51 PM »
is buyer rebates taxable income? If so, is there a way for us to request it to be not taxable (i.e deduct amount from price of home, cover closing costs, etc)?

There was a tax letter ruling stating that rebates to buyers, whether they are through escrow or outside of escrow, are not taxble to the buyer.  It's a reduction of cost basis in the home (aka when you sell the home the gain on sale is larger by the rebate amount).  I don't understand why so many agents and/or brokers try to 1099 buyers for the rebate amount so the tax letter ruling was very clear that no 1099 should be issued to the buyer.
Interesting. So in that case, why do they do it? Is it a tax incentive on their end to issue that 1099?

Why, because they don't know any better and/or too lazy to find out the proper tax treatment....doesn't take much online research to find the answer. They are realtors and think that they have to push it off to the buyer because they don't understand they can take the rebate as a deduction on Line 2 of their Schedule C. Typically you issue a 1099 to vendors (including contractors) so that you can expense the amount on the tax return.
So because I am in the process of buying a new construction home, I cannot have those credits be used towards escrow. So because the credit needs to be done outside of escrow, the agent is saying "its not a reduction in price, therefore we need to give you a 1099". Is this correct? I'm not able to find anything that says this.

Complete BS and misinformation. Not correct and tell your agent to read the IRS letter ruling (Issue 1 in the attached PDF). Tell them if they send you a 1099 that you'll sue him because he is not following the tax rules. Also, tell your agent that he needs to stop giving you tax advice/guidance unless he is a licensed tax professional because they are violating the realtor rules. It's really annoying when you have realtors thinking that they know how to handle things from a tax side. Never let a realtor say that they'll provide you the rebate net of their tax.

Here's a good link explaining things clearly...

http://timelineres.blogspot.com/2011/04/while-rebates-from-real-estate-agents.html
« Last Edit: February 16, 2021, 02:58:53 PM by USCTrojanCPA »
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Offline sleepy5136

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Re: Realtor rebate for new house
« Reply #22 on: February 16, 2021, 03:25:18 PM »
is buyer rebates taxable income? If so, is there a way for us to request it to be not taxable (i.e deduct amount from price of home, cover closing costs, etc)?

There was a tax letter ruling stating that rebates to buyers, whether they are through escrow or outside of escrow, are not taxble to the buyer.  It's a reduction of cost basis in the home (aka when you sell the home the gain on sale is larger by the rebate amount).  I don't understand why so many agents and/or brokers try to 1099 buyers for the rebate amount so the tax letter ruling was very clear that no 1099 should be issued to the buyer.
Interesting. So in that case, why do they do it? Is it a tax incentive on their end to issue that 1099?

Why, because they don't know any better and/or too lazy to find out the proper tax treatment....doesn't take much online research to find the answer. They are realtors and think that they have to push it off to the buyer because they don't understand they can take the rebate as a deduction on Line 2 of their Schedule C. Typically you issue a 1099 to vendors (including contractors) so that you can expense the amount on the tax return.
So because I am in the process of buying a new construction home, I cannot have those credits be used towards escrow. So because the credit needs to be done outside of escrow, the agent is saying "its not a reduction in price, therefore we need to give you a 1099". Is this correct? I'm not able to find anything that says this.

Complete BS and misinformation. Not correct and tell your agent to read the IRS letter ruling (Issue 1 in the attached PDF). Tell them if they send you a 1099 that you'll sue him because he is not following the tax rules. Also, tell your agent that he needs to stop giving you tax advice/guidance unless he is a licensed tax professional because they are violating the realtor rules. It's really annoying when you have realtors thinking that they know how to handle things from a tax side. Never let a realtor say that they'll provide you the rebate net of their tax.

Here's a good link explaining things clearly...

http://timelineres.blogspot.com/2011/04/while-rebates-from-real-estate-agents.html
To make matters worse, the broker won't be giving us the rebate, but the agent will be sending it to us directly. Because of this, the agent does not want to take the deductions on her end and instead give us a 1099 to protect herself. Makes me feel like she has some stuff to hide in her taxes. I'm going to call her out on this because this is very unprofessional. She is basically looking out for herself and not her clients. I feel like its going to come down to either taking a 1099 with a rebate or no rebate if no 1099 is assigned. What do you guys think?
« Last Edit: February 16, 2021, 03:41:58 PM by sleepy5136 »

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Re: Realtor rebate for new house
« Reply #23 on: February 16, 2021, 03:39:58 PM »
is buyer rebates taxable income? If so, is there a way for us to request it to be not taxable (i.e deduct amount from price of home, cover closing costs, etc)?

There was a tax letter ruling stating that rebates to buyers, whether they are through escrow or outside of escrow, are not taxble to the buyer.  It's a reduction of cost basis in the home (aka when you sell the home the gain on sale is larger by the rebate amount).  I don't understand why so many agents and/or brokers try to 1099 buyers for the rebate amount so the tax letter ruling was very clear that no 1099 should be issued to the buyer.
Interesting. So in that case, why do they do it? Is it a tax incentive on their end to issue that 1099?

Why, because they don't know any better and/or too lazy to find out the proper tax treatment....doesn't take much online research to find the answer. They are realtors and think that they have to push it off to the buyer because they don't understand they can take the rebate as a deduction on Line 2 of their Schedule C. Typically you issue a 1099 to vendors (including contractors) so that you can expense the amount on the tax return.
So because I am in the process of buying a new construction home, I cannot have those credits be used towards escrow. So because the credit needs to be done outside of escrow, the agent is saying "its not a reduction in price, therefore we need to give you a 1099". Is this correct? I'm not able to find anything that says this.

Complete BS and misinformation. Not correct and tell your agent to read the IRS letter ruling (Issue 1 in the attached PDF). Tell them if they send you a 1099 that you'll sue him because he is not following the tax rules. Also, tell your agent that he needs to stop giving you tax advice/guidance unless he is a licensed tax professional because they are violating the realtor rules. It's really annoying when you have realtors thinking that they know how to handle things from a tax side. Never let a realtor say that they'll provide you the rebate net of their tax.

Here's a good link explaining things clearly...

http://timelineres.blogspot.com/2011/04/while-rebates-from-real-estate-agents.html
To make matters worse, the broker won't be giving us the rebate, but the agent will be sending it to us directly. Because of this, the agent does not want to take the deductions on her end and instead give us a 1099 to protect herself. Makes me feel like she has some stuff to hide in her taxes. I think its at a point now where I either take the 1099 or I get no rebate. What do you guys recommend?

Unfortunately you are stuck in a hard spot because the builders will only pay commission to the agent you registered with so you can't change an agent. So yes you are right that you might have to take the 1099 if you want the money.

You should be able to write off the 1099 though since it was improperly issued to you. Definitely consult your CPA to make sure and make sure to document what the rebate was for. Even better, get your agent to give you in writing how much they are rebating you and what transaction it is related to.

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Re: Realtor rebate for new house
« Reply #24 on: February 16, 2021, 03:46:26 PM »
Ah geeze. If after you show them all this and they still 1099 you, its a simple fix on your end. Just rather annoying. I hate seeing people get subpar service like this.

 Definitely some creative accounting going on with that agent and brokerage that they make sure to limit chances of getting audited as much as possible.
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Offline USCTrojanCPA

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Re: Realtor rebate for new house
« Reply #25 on: February 16, 2021, 05:08:39 PM »
is buyer rebates taxable income? If so, is there a way for us to request it to be not taxable (i.e deduct amount from price of home, cover closing costs, etc)?

There was a tax letter ruling stating that rebates to buyers, whether they are through escrow or outside of escrow, are not taxble to the buyer.  It's a reduction of cost basis in the home (aka when you sell the home the gain on sale is larger by the rebate amount).  I don't understand why so many agents and/or brokers try to 1099 buyers for the rebate amount so the tax letter ruling was very clear that no 1099 should be issued to the buyer.
Interesting. So in that case, why do they do it? Is it a tax incentive on their end to issue that 1099?

Why, because they don't know any better and/or too lazy to find out the proper tax treatment....doesn't take much online research to find the answer. They are realtors and think that they have to push it off to the buyer because they don't understand they can take the rebate as a deduction on Line 2 of their Schedule C. Typically you issue a 1099 to vendors (including contractors) so that you can expense the amount on the tax return.
So because I am in the process of buying a new construction home, I cannot have those credits be used towards escrow. So because the credit needs to be done outside of escrow, the agent is saying "its not a reduction in price, therefore we need to give you a 1099". Is this correct? I'm not able to find anything that says this.

Complete BS and misinformation. Not correct and tell your agent to read the IRS letter ruling (Issue 1 in the attached PDF). Tell them if they send you a 1099 that you'll sue him because he is not following the tax rules. Also, tell your agent that he needs to stop giving you tax advice/guidance unless he is a licensed tax professional because they are violating the realtor rules. It's really annoying when you have realtors thinking that they know how to handle things from a tax side. Never let a realtor say that they'll provide you the rebate net of their tax.

Here's a good link explaining things clearly...

http://timelineres.blogspot.com/2011/04/while-rebates-from-real-estate-agents.html
To make matters worse, the broker won't be giving us the rebate, but the agent will be sending it to us directly. Because of this, the agent does not want to take the deductions on her end and instead give us a 1099 to protect herself. Makes me feel like she has some stuff to hide in her taxes. I'm going to call her out on this because this is very unprofessional. She is basically looking out for herself and not her clients. I feel like its going to come down to either taking a 1099 with a rebate or no rebate if no 1099 is assigned. What do you guys think?

The broker is not the one that provides the buyer the rebate, the commission goes to the broker and then they take out their fee and/or commission split sending the rest to the agent.  The agent is the one that provides you the rebate via a check and reports it on her tax return.  Why don't you ask her if she understands what "earned income" is and if you did work for her to justify her giving you a 1099?  I bet you'll get a deer in headlights look from her. Tell her to talk to a CPA on how to handle the rebate without improperly issuing you a 1099.
Martin Mania, CPA
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Offline sleepy5136

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Re: Realtor rebate for new house
« Reply #26 on: February 16, 2021, 05:18:41 PM »
is buyer rebates taxable income? If so, is there a way for us to request it to be not taxable (i.e deduct amount from price of home, cover closing costs, etc)?

There was a tax letter ruling stating that rebates to buyers, whether they are through escrow or outside of escrow, are not taxble to the buyer.  It's a reduction of cost basis in the home (aka when you sell the home the gain on sale is larger by the rebate amount).  I don't understand why so many agents and/or brokers try to 1099 buyers for the rebate amount so the tax letter ruling was very clear that no 1099 should be issued to the buyer.
Interesting. So in that case, why do they do it? Is it a tax incentive on their end to issue that 1099?

Why, because they don't know any better and/or too lazy to find out the proper tax treatment....doesn't take much online research to find the answer. They are realtors and think that they have to push it off to the buyer because they don't understand they can take the rebate as a deduction on Line 2 of their Schedule C. Typically you issue a 1099 to vendors (including contractors) so that you can expense the amount on the tax return.
So because I am in the process of buying a new construction home, I cannot have those credits be used towards escrow. So because the credit needs to be done outside of escrow, the agent is saying "its not a reduction in price, therefore we need to give you a 1099". Is this correct? I'm not able to find anything that says this.

Complete BS and misinformation. Not correct and tell your agent to read the IRS letter ruling (Issue 1 in the attached PDF). Tell them if they send you a 1099 that you'll sue him because he is not following the tax rules. Also, tell your agent that he needs to stop giving you tax advice/guidance unless he is a licensed tax professional because they are violating the realtor rules. It's really annoying when you have realtors thinking that they know how to handle things from a tax side. Never let a realtor say that they'll provide you the rebate net of their tax.

Here's a good link explaining things clearly...

http://timelineres.blogspot.com/2011/04/while-rebates-from-real-estate-agents.html
To make matters worse, the broker won't be giving us the rebate, but the agent will be sending it to us directly. Because of this, the agent does not want to take the deductions on her end and instead give us a 1099 to protect herself. Makes me feel like she has some stuff to hide in her taxes. I'm going to call her out on this because this is very unprofessional. She is basically looking out for herself and not her clients. I feel like its going to come down to either taking a 1099 with a rebate or no rebate if no 1099 is assigned. What do you guys think?

The broker is not the one that provides the buyer the rebate, the commission goes to the broker and then they take out their fee and/or commission split sending the rest to the agent.  The agent is the one that provides you the rebate via a check and reports it on her tax return.  Why don't you ask her if she understands what "earned income" is and if you did work for her to justify her giving you a 1099?  I bet you'll get a deer in headlights look from her. Tell her to talk to a CPA on how to handle the rebate without improperly issuing you a 1099.
The problem stems exactly from this. Her CPA is telling her to issue the 1099s. The only reason I can think of is to not have such big deductions happening on her side which may cause an audit.

Offline USCTrojanCPA

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Re: Realtor rebate for new house
« Reply #27 on: February 16, 2021, 05:30:24 PM »
is buyer rebates taxable income? If so, is there a way for us to request it to be not taxable (i.e deduct amount from price of home, cover closing costs, etc)?

There was a tax letter ruling stating that rebates to buyers, whether they are through escrow or outside of escrow, are not taxble to the buyer.  It's a reduction of cost basis in the home (aka when you sell the home the gain on sale is larger by the rebate amount).  I don't understand why so many agents and/or brokers try to 1099 buyers for the rebate amount so the tax letter ruling was very clear that no 1099 should be issued to the buyer.
Interesting. So in that case, why do they do it? Is it a tax incentive on their end to issue that 1099?

Why, because they don't know any better and/or too lazy to find out the proper tax treatment....doesn't take much online research to find the answer. They are realtors and think that they have to push it off to the buyer because they don't understand they can take the rebate as a deduction on Line 2 of their Schedule C. Typically you issue a 1099 to vendors (including contractors) so that you can expense the amount on the tax return.
So because I am in the process of buying a new construction home, I cannot have those credits be used towards escrow. So because the credit needs to be done outside of escrow, the agent is saying "its not a reduction in price, therefore we need to give you a 1099". Is this correct? I'm not able to find anything that says this.

Complete BS and misinformation. Not correct and tell your agent to read the IRS letter ruling (Issue 1 in the attached PDF). Tell them if they send you a 1099 that you'll sue him because he is not following the tax rules. Also, tell your agent that he needs to stop giving you tax advice/guidance unless he is a licensed tax professional because they are violating the realtor rules. It's really annoying when you have realtors thinking that they know how to handle things from a tax side. Never let a realtor say that they'll provide you the rebate net of their tax.

Here's a good link explaining things clearly...

http://timelineres.blogspot.com/2011/04/while-rebates-from-real-estate-agents.html
To make matters worse, the broker won't be giving us the rebate, but the agent will be sending it to us directly. Because of this, the agent does not want to take the deductions on her end and instead give us a 1099 to protect herself. Makes me feel like she has some stuff to hide in her taxes. I'm going to call her out on this because this is very unprofessional. She is basically looking out for herself and not her clients. I feel like its going to come down to either taking a 1099 with a rebate or no rebate if no 1099 is assigned. What do you guys think?

The broker is not the one that provides the buyer the rebate, the commission goes to the broker and then they take out their fee and/or commission split sending the rest to the agent.  The agent is the one that provides you the rebate via a check and reports it on her tax return.  Why don't you ask her if she understands what "earned income" is and if you did work for her to justify her giving you a 1099?  I bet you'll get a deer in headlights look from her. Tell her to talk to a CPA on how to handle the rebate without improperly issuing you a 1099.
The problem stems exactly from this. Her CPA is telling her to issue the 1099s. The only reason I can think of is to not have such big deductions happening on her side which may cause an audit.

Either she is lying to you that her CPA told her to issue you a 1099 or her CPA is a lazy idiot. Send her the IRS letter ruling and tell her to have her CPA read that and her that you'll report her to the IRS for improperly sending you the 1099.  I've been audited by the IRS for my rebates for 4 straight years and I came out the winner while they just wasted their time.  All I needed to provide the IRS was a copy of the canceled checks to the buyers and the closing statements...easy peasy.  Maybe he has some other shady writeoffs that she's afraid of the IRS asking about.  haha
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Offline sleepy5136

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Re: Realtor rebate for new house
« Reply #28 on: February 16, 2021, 06:35:53 PM »
is buyer rebates taxable income? If so, is there a way for us to request it to be not taxable (i.e deduct amount from price of home, cover closing costs, etc)?

There was a tax letter ruling stating that rebates to buyers, whether they are through escrow or outside of escrow, are not taxble to the buyer.  It's a reduction of cost basis in the home (aka when you sell the home the gain on sale is larger by the rebate amount).  I don't understand why so many agents and/or brokers try to 1099 buyers for the rebate amount so the tax letter ruling was very clear that no 1099 should be issued to the buyer.
Interesting. So in that case, why do they do it? Is it a tax incentive on their end to issue that 1099?

Why, because they don't know any better and/or too lazy to find out the proper tax treatment....doesn't take much online research to find the answer. They are realtors and think that they have to push it off to the buyer because they don't understand they can take the rebate as a deduction on Line 2 of their Schedule C. Typically you issue a 1099 to vendors (including contractors) so that you can expense the amount on the tax return.
So because I am in the process of buying a new construction home, I cannot have those credits be used towards escrow. So because the credit needs to be done outside of escrow, the agent is saying "its not a reduction in price, therefore we need to give you a 1099". Is this correct? I'm not able to find anything that says this.

Complete BS and misinformation. Not correct and tell your agent to read the IRS letter ruling (Issue 1 in the attached PDF). Tell them if they send you a 1099 that you'll sue him because he is not following the tax rules. Also, tell your agent that he needs to stop giving you tax advice/guidance unless he is a licensed tax professional because they are violating the realtor rules. It's really annoying when you have realtors thinking that they know how to handle things from a tax side. Never let a realtor say that they'll provide you the rebate net of their tax.

Here's a good link explaining things clearly...

http://timelineres.blogspot.com/2011/04/while-rebates-from-real-estate-agents.html
To make matters worse, the broker won't be giving us the rebate, but the agent will be sending it to us directly. Because of this, the agent does not want to take the deductions on her end and instead give us a 1099 to protect herself. Makes me feel like she has some stuff to hide in her taxes. I'm going to call her out on this because this is very unprofessional. She is basically looking out for herself and not her clients. I feel like its going to come down to either taking a 1099 with a rebate or no rebate if no 1099 is assigned. What do you guys think?

The broker is not the one that provides the buyer the rebate, the commission goes to the broker and then they take out their fee and/or commission split sending the rest to the agent.  The agent is the one that provides you the rebate via a check and reports it on her tax return.  Why don't you ask her if she understands what "earned income" is and if you did work for her to justify her giving you a 1099?  I bet you'll get a deer in headlights look from her. Tell her to talk to a CPA on how to handle the rebate without improperly issuing you a 1099.
The problem stems exactly from this. Her CPA is telling her to issue the 1099s. The only reason I can think of is to not have such big deductions happening on her side which may cause an audit.

Either she is lying to you that her CPA told her to issue you a 1099 or her CPA is a lazy idiot. Send her the IRS letter ruling and tell her to have her CPA read that and her that you'll report her to the IRS for improperly sending you the 1099.  I've been audited by the IRS for my rebates for 4 straight years and I came out the winner while they just wasted their time.  All I needed to provide the IRS was a copy of the canceled checks to the buyers and the closing statements...easy peasy.  Maybe he has some other shady writeoffs that she's afraid of the IRS asking about.  haha

got it. lets see what she says tomorrow. If let's say she ends up not giving a rebate because of not issuing a 1099, should I still take the rebate and figure out a way to handle the improper file of the 1099? i feel like not taking the rebate is leaving money on the table. i'll definitely get her to have something in writing as well to mention what the rebate for, the amount, etc. But I have a feeling she will not want to give it to me in writing.

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Re: Realtor rebate for new house
« Reply #29 on: February 16, 2021, 07:56:47 PM »
is buyer rebates taxable income? If so, is there a way for us to request it to be not taxable (i.e deduct amount from price of home, cover closing costs, etc)?

There was a tax letter ruling stating that rebates to buyers, whether they are through escrow or outside of escrow, are not taxble to the buyer.  It's a reduction of cost basis in the home (aka when you sell the home the gain on sale is larger by the rebate amount).  I don't understand why so many agents and/or brokers try to 1099 buyers for the rebate amount so the tax letter ruling was very clear that no 1099 should be issued to the buyer.
Interesting. So in that case, why do they do it? Is it a tax incentive on their end to issue that 1099?

Why, because they don't know any better and/or too lazy to find out the proper tax treatment....doesn't take much online research to find the answer. They are realtors and think that they have to push it off to the buyer because they don't understand they can take the rebate as a deduction on Line 2 of their Schedule C. Typically you issue a 1099 to vendors (including contractors) so that you can expense the amount on the tax return.
So because I am in the process of buying a new construction home, I cannot have those credits be used towards escrow. So because the credit needs to be done outside of escrow, the agent is saying "its not a reduction in price, therefore we need to give you a 1099". Is this correct? I'm not able to find anything that says this.

Complete BS and misinformation. Not correct and tell your agent to read the IRS letter ruling (Issue 1 in the attached PDF). Tell them if they send you a 1099 that you'll sue him because he is not following the tax rules. Also, tell your agent that he needs to stop giving you tax advice/guidance unless he is a licensed tax professional because they are violating the realtor rules. It's really annoying when you have realtors thinking that they know how to handle things from a tax side. Never let a realtor say that they'll provide you the rebate net of their tax.

Here's a good link explaining things clearly...

http://timelineres.blogspot.com/2011/04/while-rebates-from-real-estate-agents.html
To make matters worse, the broker won't be giving us the rebate, but the agent will be sending it to us directly. Because of this, the agent does not want to take the deductions on her end and instead give us a 1099 to protect herself. Makes me feel like she has some stuff to hide in her taxes. I'm going to call her out on this because this is very unprofessional. She is basically looking out for herself and not her clients. I feel like its going to come down to either taking a 1099 with a rebate or no rebate if no 1099 is assigned. What do you guys think?

The broker is not the one that provides the buyer the rebate, the commission goes to the broker and then they take out their fee and/or commission split sending the rest to the agent.  The agent is the one that provides you the rebate via a check and reports it on her tax return.  Why don't you ask her if she understands what "earned income" is and if you did work for her to justify her giving you a 1099?  I bet you'll get a deer in headlights look from her. Tell her to talk to a CPA on how to handle the rebate without improperly issuing you a 1099.
The problem stems exactly from this. Her CPA is telling her to issue the 1099s. The only reason I can think of is to not have such big deductions happening on her side which may cause an audit.

Either she is lying to you that her CPA told her to issue you a 1099 or her CPA is a lazy idiot. Send her the IRS letter ruling and tell her to have her CPA read that and her that you'll report her to the IRS for improperly sending you the 1099.  I've been audited by the IRS for my rebates for 4 straight years and I came out the winner while they just wasted their time.  All I needed to provide the IRS was a copy of the canceled checks to the buyers and the closing statements...easy peasy.  Maybe he has some other shady writeoffs that she's afraid of the IRS asking about.  haha

got it. lets see what she says tomorrow. If let's say she ends up not giving a rebate because of not issuing a 1099, should I still take the rebate and figure out a way to handle the improper file of the 1099? i feel like not taking the rebate is leaving money on the table. i'll definitely get her to have something in writing as well to mention what the rebate for, the amount, etc. But I have a feeling she will not want to give it to me in writing.

Take the rebate. Figure it out with the IRS later. You will win any sort of audit and scrutiny by the IRS.

 

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