Tax Time Tips For Rental Property Investors

Tax Time Tips For Rental Property Investors
While owning a​ rental property can be a​ terrific way to​ bring in​ income,​ those extra dollars can make things complicated when it​ comes to​ preparing a​ tax return.
Fortunately for the​ 15 million people who own rental properties in​ the​ U.S.,​ there are ways to​ make tax season a​ little more manageable:
• Store your receipts,​ bills and statements during the​ year .​
This will make it​ much easier to​ locate and organize them at​ tax time .​
Create an​ envelope or​ folder for each property,​ and put all of​ your receipts in​ there during the​ year .​
Do the​ same for regular bills such as​ the​ mortgage,​ property taxes,​ insurance,​ utilities,​ etc.
• Keep good rental payment records .​
You probably get a​ lot of​ checks-and even cash-from your tenants during the​ year .​
It can be really hard to​ figure out at​ tax time if​ you​ don't stay organized during the​ year.
• Know what property each check comes from .​
You can record this with your bank deposits in​ your checkbook or​ a​ spreadsheet or​ rental property software.
• Use rental property software like Quicken Rental Property Manager 2.0,​ designed for people who own up to​ 10 properties and 25 total units .​
It makes it​ easier to​ file taxes and manage rental property income and expenses .​
This can help eliminate hours at​ the​ end of​ the​ year preparing for that Schedule E .​
Using the​ software,​ you​ can simply print the​ tax report and transfer the​ data to​ the​ form,​ give it​ to​ your accountant,​ or​ export data directly to​ tax preparation software like TurboTax.
• Separate security deposits from rent payments .​
Security deposits are not considered income if​ you​ intend to​ return them to​ the​ tenant,​ so make sure these deposits are separated from rent payments.
• Flag expense receipts .​
Some expenses are hard to​ classify properly for the​ IRS .​
When you​ replace the​ faucet in​ the​ bathroom,​ is​ that considered a​ repair or​ a​ capital improvement? It makes a​ big difference to​ Uncle Sam because 100 percent of​ repairs can be deducted this year,​ but capital improvements must be deducted over time .​
When you're not sure,​ flag those receipts so you​ can later discuss them with your accountant .​
Keep them in​ a​ separate place or​ flag them in​ your expense journal.
• Lastly,​ don't forget the​ mileage deduction .​
You probably rack up a​ lot of​ miles driving to​ and from your properties and those trips to​ the​ hardware store .​
It can be tedious to​ keep track of​ the​ mileage,​ but it​ really pays off since the​ IRS allows you​ to​ deduct about 45 cents/mile .​
To make it​ easier,​ use an​ Internet map ser-vice such as​ MapQuest to​ look up the​ mileage for common trips-like between your home and each property.
Tax Time Tips For Rental Property Investors Tax Time Tips For Rental Property Investors Reviewed by Henda Yesti on July 03, 2018 Rating: 5

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