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1099 question for unusual transaction

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Level 2

I work for a company that owns a bunch of rental real estate. Last year, they purchased a house for cheap and had it moved to land the business already owned to replace a rental house that had burned down. The house was so cheap, that it was a cash transaction with no attorney involved and no land was purchased, just the house.  Do we send the seller a 1099 (I would think so) and do we report it on 1099-MISC as box 3 "other income" or box 7 non-employee compensation?  It doesn't seem like it should be subject to self-employment tax.  Or do we use 1099-S even though no LAND was involved (I'm thinking no).  Any help would be greatly appreciated!

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Level 15
Level 15

The seller may issue a 1099S to YOU for the sale...you dont 1099 anyone for something that you buy.   

The company that transported the house for you may need to be issued a 1099MISC for their services though.


♪♫•*¨*•.¸¸♥Lisa♥¸¸.•*¨*•♫♪
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Level 7
Level 7

With no attorney involved, it would probably be you that is required to send the 1099-S to the seller.  If it was a residential home, the 1099-S only has to be filed if the sale was over $250,000.  This is the case if the seller qualified for home exclusion.

If previous owner held property as business or investment property then you are required to send 1099-S.  And yes a building qualifies as real estate as well as land bought.  Do not send them a 1099-MISC because seller is probably not in the business of selling old cheap houses.