Passive real estate investment and 1099 requirements

[Sylvia Schumacher]

Hi BP,

I purchased a SFH property in need of some lighter rehabbing and am planning to keep it as a long-term rental. I was initially planning to hire some contractors to get the work done, then find a property management company to find and manage tenants.

It would be helpful for me to understand the following:

(1) I don't want to be classified as an active real estate investor in front of the IRS. I have a full time W2-job. By hiring contractors myself for the rehab, would I run at risk of that already? Would my situation change if I hired a PM and let the PM be in charge of the rehab and hire contractors?

(2) If I am classified as a passive RE investor, do I need to 1099 contractors? 

(3) In case the answer to (2) is no and I don't need to 1099 contractors: Can contractor costs still be added to my cost basis to increase depreciation accordingly? How would this be done during tax seasons - which forms/schedules? Do I need anything beyond invoices to do so?

I would highly appreciate any advice / pointers!

Thank you!