An agreement was made between the seller of a property that upon the fully executed sale of his property that I would split my commission with him 50-50. I mentioned to him that I would be sending him a 1099 for the portion of the commission that I paid out to him. Is it correct to issue him a 1099? Furthermore, Is the portion paid to the seller deductible on my taxes?

Yes, the portion paid to the seller is a valid business expense that can be claimed on your Schedule C, provided what you did was legal in your state.

Yes, if the split commission exceeds $600, then Form 1099-MISC is required to be sent to the seller for him to claim that split income as income on HIS tax return.

Isn't there an easier way? Rather than have the seller pay you the normal commission and you return half to him, why not simply cut your commission rate in half? That way no there's no fuss over issuing a 1099, and the seller's portion of the commission is considered part of his proceeds from the sale, which might even make it tax free to him. Or is there a nuance in real estate law or policy of your firm that requires you to collect the normal full commission?

ebaines has a point; cutting the commission rate in half changes nothing on yor side of the tax picture, but makes the process easier for everyone.