According to the Journal of Accountancy, owning rental property has become more like owning a small business according to new reporting requirements contained in the recently enacted Small Business Jobs Act. Beginning in January, landlords must begin keeping good records of all expenditures to anyone who has provided service to their rental property. The reason for this is that they will now have to start sending out IRS form 1099's to all partys who have provided these services. This new reporting will begin in January 2012, but will be based upon services provided starting January 2011.
For example, if you hire a plumber, painter or cleaning person to provide services at your property, or replace flooring or just have handyman work done, you will need to fill out a 1099 at the end of the year for each vendor including totals of payments to the vendor for the year. This will then need to be sent to the vendor with a copy going to the IRS as well. You should not be surprised to also learn that penalty's for failure to correctly follow these reporting requirements has also increased.
If you are utilizing a professional property management service such as ours, then this should already be in place. For instance, we have been doing this since we started in business in 1991. Best not to take this for granted though. If you are using another company, check with them to make sure this is being done.