The 1099 Rule That Changed This Year: What Property Managers Need to Know

Every January, property managers go through the same ritual: chasing W-9s, totaling vendor payments, and sending out a stack of 1099s before the deadline. Most teams run it from memory, using the same rules they followed last year.

This year, that's a mistake (also – waiting until January to start this is a mistake, but I digress…). One of the most familiar numbers in small business tax reporting changed for payments made in 2026, and I’m willing to bet plenty of property managers haven't heard about it yet. The change will mean fewer forms for some vendors, but it doesn't make the job disappear, and short-term rental operations have a few wrinkles that general advice tends to miss.

Here's what changed, what it means for your business, and how to get ready before January.

What changed

For decades, the magic number for both Forms 1099-NEC and 1099-MISC was $600. If you paid a vendor or contractor $600 or more during the year for services, you generally had to send them a 1099.

The One Big Beautiful Bill Act, signed in July 2025, raised that threshold to $2,000 for payments made after December 31, 2025. That means the forms you file in early 2027, covering 2026 payments, are the first ones under the new rule. The threshold is also set to adjust for inflation in later years, so it's worth checking the current figure each year rather than memorizing it. Unfortunately, not every state followed. A small handful of states still require their own 1099 filings at $600 (or another amount), so if you pay vendors in more than one state, check each state's rule.

The same law also reset the reporting threshold for Form 1099-K, the form payment platforms and processors send. After several years of planned reductions, it's back to the original test: more than $20,000 in payments and more than 200 transactions in a year.

In plain terms: fewer small vendors will need a 1099 from you, but your larger, regular vendors still will. And for most property managers, the larger, regular vendors are where the real volume lives.

Who gets a 1099 from you

The basic test hasn't changed: you paid someone for services in the course of your business, not with a credit card, they're not your employee, they're not a corporation (with a few exceptions), and the total for the year met the threshold. For a short-term rental management company, that usually includes:

Independent cleaners and turnover crews. Often your biggest 1099 group, and the one most likely to be paid in many small amounts that add up over the year.
Maintenance and repair contractors. Handymen, plumbers, electricians, landscapers, pool and hot tub services, and pest control, when they operate as sole proprietors or partnerships.
Other service providers. Photographers, interior designers, and consultants paid by check, ACH, or bank transfer.
Attorneys. Legal fees generally require a 1099 even when the firm is a corporation.
Property owners. If your company collects rent on an owner's behalf and pays it out, you're required to report that rent to the owner on Form 1099-MISC. The amount is the gross rent you collected for them, not the net payout after your management fee and the expenses you paid on their behalf.

That last group is where STR managers most often get tripped up. The common mistake is reporting what was actually deposited to the owner. That net figure understates their rental income. Instead, use the gross rents on each owner's statement.

If you want a refresher on how guest payments flow through to owner payouts in the first place, our guide to how STR bookkeeping works: flow of funds and trust accounting for property managers walks through it step by step.

Who doesn't

Just as important is knowing when you can skip the form. You generally don't need to issue a 1099-NEC or 1099-MISC for:

Vendors paid less than $2,000 for the year. Under the new threshold, the occasional handyman or one-time service call may drop off your list entirely.
Payments made by credit card or through a payment platform. Those are reported by the card processor or platform on Form 1099-K, so you don't report them again. This catches a lot of people: a cleaner paid by check and a cleaner paid by card are treated differently.
Most corporations. C corps and S corps are generally exempt, apart from exceptions like attorneys. An LLC isn't automatically exempt: a single-member LLC or one taxed as a partnership still gets a 1099 unless it has elected to be taxed as a corporation. A current W-9 tells you how a vendor is classified.
Your employees. Staff on payroll get a W-2, not a 1099.

One caution: "I paid them on Venmo" isn't automatically a pass. Whether a payment app counts as a reportable platform payment depends on how the payment was sent, so tag these carefully in your books. Zelle doesn't count at all: it moves money bank to bank like an ACH, so a cleaner paid by Zelle still gets a 1099 from you.

What to do before January

Plan to have every 1099 out by February 1, 2027. January 31 falls on a Sunday this cycle, so that's the deadline for Form 1099-NEC (to both the IRS and the recipient) and for getting owners their 1099-MISC. The real work happens in November and December. A little preparation now turns January into a review instead of a scramble.

Collect W-9s now, not in January. Ask every active vendor for a current W-9 before year-end, while you still have leverage and they still answer your emails (even better if you do it before you pay them!). Make it part of onboarding going forward.
Run a year-to-date vendor report. Total payments by vendor and sort them against the new $2,000 threshold. Flag anyone close to the line who may cross it in December.
Separate payment methods. Split each vendor's payments into check or ACH versus card or platform. Only the first group counts toward your 1099 totals.
Check which account paid. Vendor payments can come out of an operating account or, for owner expenses, the trust account. Make sure both are included in your totals and that each payment is coded to the right place.
Total owner rents separately. Pull each owner's gross rents for the year from their statements, not their payouts, and make sure every owner has a current W-9 on file.
Update your vendor files. Note each vendor's classification and preferred delivery method so next year starts clean.

If your books are behind or your vendor records live in three different places, this is the time to fix it. A clean year-end close makes 1099s a lot less stressful.

The bottom line

The new $2,000 threshold will shorten some 1099 lists, but it won't eliminate the work, and it raises the stakes on getting your vendor records right. Short-term rental managers juggle more payment types, more vendors, and more money flowing through trust accounts than most small businesses, which makes year-end reporting easy to get wrong.

Tax rules can change and every business is different, so review your specific situation with your CPA before filing.

If you'd rather head into January with clean books and vendor totals you can trust, Keystone Bookkeepers can help. We specialize in bookkeeping and trust accounting for short-term rental property managers, and we work with 150+ property managers across 4,100+ listings. Book a call with our team to get your year-end in order.