Dealing with contractors for the first time

[Steven Hornstein]

Hello all,

I am a first time home buyer and will be using the strategy of living in a piece of property and renting out additional bedrooms through Airbnb to help cover the cost of the mortgage, and hopefully make a profit above the mortgage. In order to get my up and running I need new floors installed and mold in the bathroom removed and replaced. I was listening on one of the podcast episodes a while back, and I feel like I heard something about how I should only deal with licensed contractors who can supply me a tax identification form that way I can write off the work done from my taxes. My question is, 1. is this true, and 2. does the person need to a licensed contractor in order for me to write off the work done. Any help to this question would be extremely helpful and thank you in advance

[Evan Polaski]

@Steven Hornstein, I would first talk to an accountant.  If this were a standalone investment property, yes you can write off all work performed, and you will need to issue 1099s for all contractor work performed.  Since this is your primary residence, you get into a little more grey area, and something I have never done.  To issue a 1099, you will need a w-9 form from each contractor. 

Licensed contractors are generally a safer bet as they, by default, are more professional simply by having registered with the local jurisdictions.  Each local has different requirements.  I.e. in Cincinnati, OH all I needed to do was get liability insurance and pay the registration fee to become a registered contractor.  No schooling needed.  When you get into plumbing and electrical, there are more formal licensure requirements.

In my area, only a licensed plumber and electrician can pull those respective permits.  A registered contractor can pull building permits for any 1-4 unit property, as can homeowners for their own properties.