10 Ways to Perfect Your Rental Property Taxes & Accounting

You can’t afford to put off learning how to better your rental property taxes and accounting systems!

The TurboTeam partnered with Deltrease Hart-Anderson, a landlord and Enrolled Agent (EA), to help you avoid trouble with the IRS.

Key Takeaways

  1. Separate Bank Accounts: Maintain distinct accounts for operating expenses and security deposits. This simplifies financial management and ensures clarity in your transactions.
  2. Know Your Financial Statements: Regularly review your cash flow statements, profit and loss statements, and balance sheets. This practice aids in making informed decisions and strategic planning.
  3. Keep All Receipts: Document every transaction meticulously. Scanning and digitally storing receipts ensures you have the necessary proof for tax deductions.
  4. Mileage Log Maintenance: Keep a detailed log of your mileage for property-related travel. This includes dates, times, destinations, and odometer readings, essential for tax deductions.
  5. Reconcile Property Management Statements: Regularly check statements from your property manager. This ensures all expenses are accounted for and accurately recorded.

Tax Essentials:

  1. Understand Your Status: Know the difference between a real estate investor and a real estate professional. This status significantly impacts your tax deductions and limitations.
  2. Don’t Forget to Depreciate: Claim depreciation on your property and its contents. This is a crucial deduction that many landlords miss.
  3. Leverage Safe Harbor Methods: These IRS provisions allow certain expenses to be fully deducted in the year they are incurred, rather than depreciated over several years.
  4. Qualified Business Income (QBI) Deduction: This new deduction allows a 20% reduction on your taxable rental income, subject to certain conditions.
  5. Cost Segregation Studies: A specialized study that can accelerate depreciation on certain property components, leading to significant tax savings.

Conclusion

The webinar emphasized the importance of staying informed and proactive in managing rental property finances. Understanding the nuances of tax laws and leveraging available deductions can substantially reduce tax liabilities and enhance profitability. For detailed guidance, consult with a tax professional who specializes in real estate. 

 

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