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Is a New Home Builder’s referral gift/money given to a referrer taxable?
January 22, 2010 | In: New Home Gifts
I referred someone to a Builder and my friend will actually be purchasing the home. There is a referral gift offered by the builder in cash and I was told I would be getting a check when my friend settles on his home. Is this gift/money taxable? Who is responsible for this if it is ? Is this considered as other income? If it is taxable, will the money I receive be net of taxes or do I have to declare the taxes myself?
Any help with regards to this would be greatly appreciated.
Thank you.
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2 Responses to Is a New Home Builder’s referral gift/money given to a referrer taxable?
dkarlsenyh
January 22nd, 2010 at 8:41 am
Yes of course it’s taxable, and since you received the money, then of course you are responsible. Who else do you think would be responsible? You would report it on the “Other Income” line of your tax return. And it’s not a gift, any more than your regular paycheck is a gift.
That being said, probably nobody actually reports such income, mainly because there’s no way the IRS would find out about it – unless it’s over $600. In that case, the home builder is legally obligated to send you a form 1099-MISC, which the IRS also gets a copy of.
bostonianinmo
January 22nd, 2010 at 9:08 am
It’s taxable income to you. And it may also be illegal income if you don’t have a real estate license but that’s another question. But it’s still taxable and no, it won’t be net of taxes; you’ll have to claim it and pay the tax when you file your return.