Did You Give Your Friend A W-2 For Managing Your Duplex?

duplex property manager w-2If you’ve been paying a friend, relative or neighbor to manage your duplex, are you planning on sending them a W-2 at the end of the year?

Minnesota state law requires anyone being compensated for managing a property either be a waged employee of the duplex owners, have a real estate salesperson’s license, or work for a management company that has a real estate license.

Don’t ask me why, but property managers cannot be classified as independent contractors. I’ve asked a number of legal and tax professionals, and no one seems to have a definitive answer. Perhaps it’s due to the regularity of the work they do for duplex owners.

And all fees for a real estate licensee must be paid to that salesperson’s broker, not the agent directly.