Tax season for landlords does not really start in April. It starts in November and December, when you still have time to gather records, collect contractor forms, and spot missing receipts. Waiting until your accountant asks for everything is how you lose deductions.
This guide covers what Glen Allen and Chesterfield landlords should track before year-end, including an important change to 1099 reporting for payments made in 2026.
Key Takeaways
- Rental income generally includes rent and certain fees, and it is reported on Schedule E for most individual landlords.
- A security deposit you plan to return is generally not income, but a deposit you keep or apply to rent generally is.
- The 1099-NEC and 1099-MISC reporting threshold rose from $600 to $2,000 for payments made on or after January 1, 2026.
- Keep receipts that separate repairs from improvements, since they are treated differently for tax purposes.
- Collect W-9 forms from contractors now so January filings go smoothly.
Track All Rental Income
According to IRS Publication 527, rental income generally includes amounts you receive for using your property, such as rent, advance rent, and certain fees. Keep a clear record of:
- Monthly rent collected, by property
- Late fees, pet rent, and other tenant charges
- Any security deposit you kept or applied to rent
- Rent paid in advance for next year
A security deposit you intend to return is generally not included in income. If you keep part of it for damage or unpaid rent, that amount generally becomes income in the year you keep it.
Track Deductible Expenses
Organized expense records can reduce your taxable rental income. Common categories include:
- Mortgage interest and property taxes
- Insurance premiums
- Repairs and maintenance
- Property management fees
- Utilities you pay
- Advertising and leasing costs
- Legal and professional fees
- Travel to and from the property, with a mileage log
Repairs vs. Improvements
This is one of the most common areas of confusion. In general, repairs that keep a property in good working condition, such as fixing a leak or patching drywall, may be deducted in the year you pay for them.
Improvements that add value, extend the property's life, or adapt it to a new use, such as a new roof or a full kitchen remodel, are generally depreciated over time. Under IRS rules, residential rental buildings are generally depreciated over 27.5 years. Keep invoices that describe the work clearly so your tax preparer can classify each expense correctly.
The 1099 Change for 2026 Payments
If your rental activity is considered a trade or business, you may need to issue Form 1099-NEC to contractors you pay for services. The One Big Beautiful Bill Act, signed in 2025, raised the 1099-NEC and 1099-MISC reporting threshold from $600 to $2,000 for payments made on or after January 1, 2026, according to Paychex (updated April 23, 2026). See the IRS page About Form 1099-NEC for current instructions.
That means a handyman you paid $1,500 in 2026 may no longer require a 1099-NEC, while one you paid $2,500 likely would. The threshold is scheduled to be indexed for inflation starting in 2027. Confirm your filing obligations with a tax professional, since whether you must file depends on your situation.
The same law also kept the Form 1099-K threshold for payment apps and platforms at $20,000 and more than 200 transactions. Even if you do not receive a 1099-K, you still must report all rental income.
State and Local Considerations
Virginia residents generally report rental income on their state income tax return as well. Henrico and Chesterfield counties bill local real estate taxes separately, so keep copies of every bill and payment confirmation for your records. Virginia Tax publishes current forms and guidance.
If you own property in more than one county or live outside Virginia, your reporting may be more complex. A local tax professional can help you understand which returns you need to file and which deductions apply.
Your Year-End Checklist
- Reconcile rent collected against your lease records for every unit.
- Request W-9 forms from every contractor you paid this year. The form is available on the IRS Form W-9 page.
- Total payments to each contractor to see who meets the $2,000 threshold.
- Save digital copies of receipts and invoices, organized by property.
- Update your mileage log for property visits.
- Note any large improvements and their completion dates.
- Schedule a meeting with your CPA before the end of December.
Hypothetical example for illustration only. Say you own two Glen Allen rentals. You paid a plumber $2,400 and a landscaper $1,200 in 2026. Under the new threshold, you'd likely need a 1099-NEC from the plumber, while you may not need one from the landscaper, assuming your rental activity requires 1099 reporting.
Frequently Asked Questions
What is the 1099-NEC threshold for 2026?
For payments made on or after January 1, 2026, the threshold is $2,000, up from $600. Forms for 2025 payments still used the $600 threshold.
Is a security deposit taxable income?
Generally not, if you plan to return it. It becomes income if you keep it for damage or apply it to unpaid rent.
Can I deduct a new roof on my rental?
A new roof is usually an improvement you depreciate over time rather than deduct all at once. Ask your tax preparer about the rules that apply to you.
Where do I report rental income?
Most individual landlords report rental income and expenses on Schedule E of Form 1040. Your situation may differ, so check with a tax professional.
Start the New Year Organized
A few hours of record-keeping in November and December can save you stress and money in the spring. Clean records also make it easier to see how each property is really performing. Our owner accounting and reporting is built to support this.
PMI Richmond provides detailed owner statements and year-end reporting for rental owners across Glen Allen, Chesterfield, and the greater Richmond area. Contact our team or request a free rental analysis to learn how we can simplify your rental records.
