Are Buyer Agent Commission Rebates Taxable in NYC?

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Are Buyer Broker Commission Rebates Taxable in NYC? Learn More: https://www.hauseit.com/are-buyer-broker-commission-rebates-taxable-in-nyc/

Are Buyer Broker Commission Rebates taxable in New York City? We will demystify this topic in the following video. I'm Nick at Hauseit, visit our website https://www.hauseit.com to request New York City's largest Buyer Agent Commission rebate. So, let's get started.

Generally speaking, New York City Buyer Broker Commission Rebates are not considered to be taxable income. The IRS released a private letter ruling on the taxability of Buyer Agent Commission Rebates in 2007 in response to a petition for clarification from a national real estate brokerage engaged in the provision of rebates. The IRS determined that a buyer broker commission rebate made through a payment or credit at closing is not included in a purchaser’s gross income but rather represents an adjustment to the purchase price of the property.

Will my buyer's agent send me a 1099 IRS Form for the rebate I am receiving? The IRS ruled that a broker does not have a 1099 reporting obligation because a "payment or credit at closing represents an adjustment to the purchase price of a home and is generally not included in a purchaser’s gross income and quote."

It's important to note that because a taxpayer can only petition the IRS on its own behalf, and the ruling above only directly applies to the company which made the petition. That being said the language of the IRS ruling does make it very clear that any payment or credit at closing represents an adjustment to the purchase price and is not included in a purchaser’s gross income.

How does a Buyer Broker Commission Rebate affect the cost basis of a property? Well, the private IRS ruling on the taxability of broker commission rebates determined that they are not taxable but rather reflect an adjustment to the purchase price itself. For example, let's say you buy a co-op in New York City for $1.5 million dollars and you receive a $30k buyer broker Commission rebate. The rebate you receive would reduce your cost basis on the property by $30k therefore your cost basis would be $1.5 million minus $30k which comes out to $1,470,000.

Finally, we want to remind you that Hauseit and its affiliates do not provide tax legal financial or accounting advice. This material has been prepared for informational purposes only and is not intended to provide and should not be relied on for tax legal financial or accounting advice. No representation guarantee or warranty of any kind is made regarding the completeness or accuracy of the information provided.

We hope you found this video helpful. I'm Nick at Hauseit. Visit our website https://www.hauseit.com to request New York City's largest Buyer Agent Commission Rebate and if you liked this video do us a favor hit like, subscribe, leave us a comment and we hope to see you on the next one!

Save 2% When Buying in NYC: https://www.hauseit.com/hauseit-buyer-closing-credit-nyc/
NYC Buyer Closing Cost Calculator: https://www.hauseit.com/closing-cost-calculator-for-buyer-nyc/
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