Rental Property Tax Rules in 2026: 1099 Reporting, FBAR, and the New Depreciation Rules

Key Takeaways

The 1099-NEC filing threshold jumped from $600 to $2,000 for the 2026 tax year - landlords no longer need to issue a 1099 to a contractor paid less than $2,000 total during the year.
FBAR (FinCEN Form 114) is still required if your combined foreign financial accounts exceeded $10,000 at any point during 2026 - that threshold hasn't changed, and it's separate from the old paper Form 90-22.1, which was digitized years ago.
FBAR is filed electronically through FinCEN's BSA E-Filing System, due April 15, 2027 for the 2026 tax year, with an automatic extension to October 15 - no extension request needed.
OBBBA permanently restored 100% bonus depreciation for qualifying rental property components (appliances, carpeting, certain fixtures) placed in service after January 19, 2025, and made the 20% QBI deduction for rental income permanent.
FBAR penalties are steep and inflation-adjusted: up to $16,536 per violation for non-willful failures, and the greater of $165,353 or 50% of the account balance for willful violations.

Two separate reporting requirements tend to get conflated by landlords and anyone with money outside the U.S.: issuing 1099s to contractors you pay for property work, and disclosing foreign financial accounts to the Treasury. Both have real deadlines and real penalties, and both changed meaningfully under recent legislation.

Covered in this Article:

1099 Reporting for Landlords: The Threshold Just Changed

If you own rental property and pay a contractor — a plumber, painter, handyman, property manager, or accountant — for services related to that property, you may need to issue them a Form 1099-NEC (nonemployee compensation) at year-end.

What changed for 2026: the filing threshold rose from $600 to $2,000 in total payments made to a given contractor during the tax year. If you paid a contractor $1,800 total in 2026, you’re no longer required to issue a 1099-NEC — though the contractor still owes tax on that income regardless of whether you file the form. The $2,000 threshold is scheduled to adjust for inflation starting with the 2027 tax year.

A few practical points that haven’t changed:

Collect a Form W-9 from any contractor before paying them, capturing their legal name, address, and Taxpayer Identification Number (SSN or EIN). This is far easier to get before you cut the final check than after.
The threshold applies per contractor, per year, not per individual payment — five separate $500 payments to the same contractor still total $2,500 and cross the threshold.
If you withheld any federal income tax from a contractor’s payments, you must file a 1099-NEC regardless of the total amount paid.
State rules can differ. Some states still require reporting at lower thresholds or via separate state filings even where the federal threshold no longer applies — check your state’s Department of Revenue if you’re unsure.
This 1099-NEC requirement is separate from the rules governing Form 1099-K, which platforms like Airbnb or Venmo use to report payments you received — see our 1099-K guide for that side of the equation if you rent through a platform.

FBAR: Foreign Bank Account Reporting

If you have a financial interest in, or signature authority over, foreign financial accounts — bank accounts, brokerage accounts, certain foreign pensions — with a combined value exceeding $10,000 at any point during the year, you’re required to file an FBAR (Report of Foreign Bank and Financial Accounts).

How it’s filed today: FBAR is no longer the old paper Form 90-22.1 referenced in older guidance. It’s now FinCEN Form 114, filed electronically through the Treasury’s BSA E-Filing System, entirely separate from your regular tax return.

Deadline: FBAR for the 2026 tax year is due April 15, 2027, with an automatic extension to October 15 — you don’t need to file anything to get that extension; it’s built in.

The $10,000 threshold is an aggregate, not a per-account, figure. If you have three foreign accounts holding $4,000 each, you’ve crossed the threshold and must file, even though no single account exceeds $10,000 on its own.

Penalties are steep. For 2026, non-willful violations carry penalties up to $16,536 per violation, per year (inflation-adjusted annually). Willful violations are far more severe: the greater of $165,353 or 50% of the account balance at the time of the violation. Given the penalty exposure, if you’re unsure whether an account qualifies, it’s worth confirming with a tax professional rather than guessing.

Don’t confuse FBAR with FATCA Form 8938. These are separate requirements with separate thresholds and separate filing locations. Form 8938 (Statement of Specified Foreign Financial Assets) is filed with your tax return and kicks in at higher thresholds than FBAR ($50,000+ for single filers living in the U.S., higher still for those living abroad) — you may owe one, both, or neither depending on your situation, so check both independently rather than assuming one covers the other.

What Changed for Rental Property Owners Under OBBBA

Separate from reporting requirements, the One Big Beautiful Bill Act made two permanent changes that meaningfully affect how much tax landlords owe on rental income:

100% bonus depreciation is back, permanently, for qualifying property placed in service after January 19, 2025. The rental building’s structure itself still depreciates over 27.5 years (residential) — that hasn’t changed — but components with shorter recovery periods, like appliances, carpeting, and certain fixtures, can now be fully expensed in the year they’re placed in service rather than depreciated gradually. Combined with a cost segregation study, this can generate a large first-year deduction for property acquired or substantially renovated in 2026.

The 20% QBI deduction for rental income is now permanent. Previously set to expire, landlords who qualify can continue deducting 20% of net rental income (subject to the usual limitations around taxable income thresholds and the type of rental activity), with no expiration date to plan around anymore.

Looking Ahead: 2027

The 1099-NEC threshold itself begins adjusting for inflation with the 2027 tax year, so expect a modest bump above $2,000 once the IRS releases official figures later in 2026. FBAR’s $10,000 threshold has historically stayed flat for many years and isn’t currently scheduled to change, but the penalty amounts do adjust for inflation annually — worth checking the updated figures each filing season if this applies to you. On the depreciation side, since bonus depreciation and the QBI deduction are now permanent rather than temporary provisions, the bigger planning question going forward is less “will this expire” and more “am I structuring purchases and cost segregation studies to take full advantage.”

Frequently Asked Questions

QDo I need to send a 1099 to my contractor if I paid them $1,500 in 2026?

ANo. The 1099-NEC filing threshold rose from $600 to $2,000 for the 2026 tax year, so payments under $2,000 to a single contractor no longer require a 1099-NEC. The contractor still must report and pay tax on that income regardless of whether you file the form.

QWhat is FBAR and who has to file it?

AFBAR (FinCEN Form 114) is required if you have a financial interest in or signature authority over foreign financial accounts totaling more than $10,000 combined at any point during the year. It's filed electronically through FinCEN's BSA E-Filing System, separate from your regular tax return.

QIs FBAR the same as Form 8938?

ANo, though they're often confused. FBAR has a $10,000 aggregate threshold and is filed with FinCEN. Form 8938 (FATCA) is filed with your IRS tax return and has higher thresholds ($50,000+ for single U.S. residents, more for those living abroad). You may owe one, both, or neither - check each independently.

QWhat happens if I don't file an FBAR when required?

APenalties are significant: up to $16,536 per violation for non-willful failures (2026 inflation-adjusted amount), and the greater of $165,353 or 50% of the account balance for willful violations. Given the exposure, confirm your filing obligation with a tax professional if you're unsure.

QHow did OBBBA change rental property depreciation?

AOBBBA permanently restored 100% bonus depreciation for qualifying property components (like appliances and certain fixtures) placed in service after January 19, 2025, and made the 20% QBI deduction for rental income permanent - both were previously temporary or scheduled to phase down.