Tax Questions for 1st SFH
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Tax Questions for 1st SFH (by JD [TN]) Jan 16, 2019 7:09 AM
       Tax Questions for 1st SFH (by Busy [WI]) Jan 16, 2019 7:34 AM
       Tax Questions for 1st SFH (by 6x6 [TN]) Jan 16, 2019 9:53 AM
       Tax Questions for 1st SFH (by myob [GA]) Jan 16, 2019 10:07 AM
       Tax Questions for 1st SFH (by Robert J [CA]) Jan 16, 2019 11:59 AM
       Tax Questions for 1st SFH (by Kim [TX]) Jan 16, 2019 12:09 PM
       Tax Questions for 1st SFH (by 6x6 [TN]) Jan 16, 2019 12:15 PM
       Tax Questions for 1st SFH (by Steve [TN]) Jan 17, 2019 5:27 AM
       Tax Questions for 1st SFH (by Marv [IL]) Jan 17, 2019 5:52 AM
       Tax Questions for 1st SFH (by myob [GA]) Jan 17, 2019 6:08 AM
       Tax Questions for 1st SFH (by #22 [MO]) Jan 17, 2019 6:29 AM
       Tax Questions for 1st SFH (by Steve [TN]) Jan 17, 2019 8:30 AM
       Tax Questions for 1st SFH (by 6x6 [TN]) Jan 17, 2019 9:27 AM
       Tax Questions for 1st SFH (by myob [GA]) Jan 18, 2019 9:49 AM
       Tax Questions for 1st SFH (by Ray-N-Pa [PA]) Jan 19, 2019 1:44 PM
       Tax Questions for 1st SFH (by 6x6 [TN]) Jan 19, 2019 2:48 PM
       Tax Questions for 1st SFH (by Ray-N-Pa [PA]) Jan 19, 2019 3:45 PM
       Tax Questions for 1st SFH (by 6x6 [TN]) Jan 19, 2019 3:51 PM

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Tax Questions for 1st SFH (by JD [TN]) Posted on: Jan 16, 2019 7:09 AM
Message:

I have just bought my first SFH rental. It was rented for one month in December 2018. My question is should the insurance and taxes be expensed on schedule E or should they be part of the cost basis since I did extensive remodeling before I rented it? Thanks --99.102.xx.xxx




Tax Questions for 1st SFH (by Busy [WI]) Posted on: Jan 16, 2019 7:34 AM
Message:

NOLO Publishers book Every Landlordís Tax Deduction Guide, by Stephen Fishman, J D. Easy read, put post-it notes, in to mark pertinent info as you read it.

Expenses that occurred before it was ready and available to rent get put into basis. Expenses incurred once that ad goes up, expensed. Might need to split the property taxes and insurance.

Oh, if it was rented for the month of December, did the ad go up in October or November? Then that might be your ready and available to rent date.

I print out the ads as soon as I post them, put a copy in with the tax return.

Welcome to landlording! --70.92.xxx.xxx




Tax Questions for 1st SFH (by 6x6 [TN]) Posted on: Jan 16, 2019 9:53 AM
Message:

Sorry I can't help you with this one but it is nice to see someone else from TN on here. --73.120.xx.xxx




Tax Questions for 1st SFH (by myob [GA]) Posted on: Jan 16, 2019 10:07 AM
Message:

I got audited on this my first year in. Was a valuable less about the IRS. I learned more about them in that 4 hr audit then in 35 more years. WHAT I learned is this: these folks work 9 to 5 and like any worker you bust my b ls I bust yours.

Anything prior to it becoming a rental is cost basis. Any education, if you had no rentals at the time of education is not deductible. You must be in the business already to get the deduction.

Would like to mention here for seasoned investors-- I've heard if you PRE PLAN your purchases -- and buy equipment and supplies prior to purchase date of new investment some people have actually charged the fix up costs on NEW purchase to existing properties. I would never do that but heard it has been done once or twice.

Prepaid insurance take the year you paid but taxes are shown as you and their portion-- think you can only take what your portion was at closing. Next year get full credit. --99.103.xxx.xxx




Tax Questions for 1st SFH (by Robert J [CA]) Posted on: Jan 16, 2019 11:59 AM
Message:

A friend was in escrow to buy her first rental home. She wouldn't close until the tenants moved out. I told her that if she purchased the rental with a tenant, then any repairs or remolding made could be written off since it was in service at the time of purchase. Other wise the cost would have been added to the basis.

After a few months the tenant moved and she spent around $20K on upgrades and improvements to maximize the rental income with the new tenant. She got to write off and depreciate those $20K expenses and the new rent was around $500 more than the old tenants were paying. --47.156.xx.xx




Tax Questions for 1st SFH (by Kim [TX]) Posted on: Jan 16, 2019 12:09 PM
Message:

Note what Busy said. The period for deductions begins when the property is available/advertised. So if you listed it in October, but didn't have a lease until December, October is your start date. --23.30.xx.xxx




Tax Questions for 1st SFH (by 6x6 [TN]) Posted on: Jan 16, 2019 12:15 PM
Message:

RobertJ,thank you for sharing. I have read this before on here about someone being in escrow but still have not figured out exactly what that means or what that is,could you explain? Also what does it mean to add to basis? Do you mean the cost of repairs or remodeling would be figured into the cost of house on taxes? Is basis the initial cost? Why is it better to write off and depreciate than add to the basis? Don't you get a tax break of sorts either way? Thank you for your time. --73.120.xx.xxx




Tax Questions for 1st SFH (by Steve [TN]) Posted on: Jan 17, 2019 5:27 AM
Message:

Okay, here is how this works. For taxes, you want to expense everything you possibly can in the year you incur the expense. If spending becomes part of the property cost basis, you will have to wait until you sell to recover it.

As others have said, you can only expense things if your place if available to be rented.

So, your place was available to be rented on the day you closed. Got that? Sure there was some construction and cleaning going on, but it was for rent. Do you follow me? --68.156.xx.xx




Tax Questions for 1st SFH (by Marv [IL]) Posted on: Jan 17, 2019 5:52 AM
Message:

I deduct real estate taxes in the year paid. I also deduct taxes paid at closing even if they have not been paid to the county yet.

When you purchase a house, at closing the seller gives you a credit for taxes he/she owes. Generally you do not pay them at closing. When the next tax bill comes due, you pay the amount you were given at closing plus any taxes you owe for owning the house. You can deduct the latter. --173.15.xx.xxx




Tax Questions for 1st SFH (by myob [GA]) Posted on: Jan 17, 2019 6:08 AM
Message:

Steve TN I'm not sure what you wrote in first paragraph is correct?

You add to the cost basis-- and that now becomes the depreciation basis. You don't have to wait until you sell to recover it--?? --99.103.xxx.xxx




Tax Questions for 1st SFH (by #22 [MO]) Posted on: Jan 17, 2019 6:29 AM
Message:

Myob, I'm a non cpa tax junkie. I'm with steve. Imo, you're being good to the IRS with some of your practices. But, it's all about personal preferences.FWIW, went thru a 3 year bumper to bumper IRS audit and was fine.

Op: find an experienced investor who understands the tax side and buy them lunch. --174.234.xxx.xx




Tax Questions for 1st SFH (by Steve [TN]) Posted on: Jan 17, 2019 8:30 AM
Message:

MYOB, Yes, you have it correct. But the main point is, you still want to expense everything you can in the year you spend the money. --208.84.xxx.xx




Tax Questions for 1st SFH (by 6x6 [TN]) Posted on: Jan 17, 2019 9:27 AM
Message:

Thank you all for explaining.. --73.120.xx.xxx




Tax Questions for 1st SFH (by myob [GA]) Posted on: Jan 18, 2019 9:49 AM
Message:

Steve on a new purchase-- you can't expense it because it's not "in service". Anything you buy to make it a rental-- is added to the cost basis- then depreciated.

Smart investors see what is coming down the pipeline and PRE plan their purchases of supplies and equipment-- prior to owning and bill it to OTHER properties IN SERVICE already. --99.103.xxx.xxx




Tax Questions for 1st SFH (by Ray-N-Pa [PA]) Posted on: Jan 19, 2019 1:44 PM
Message:

There was a subtle change in what the CPA provided to me for working papers and i am not sure how this will impact the schedule Es. In days gone, they question was ask about the number of days the unit has been placed in service. This year they asked, how many days in this year, was the unit rented at fair market value.

I am wondering if the IRS is easing up on the "in service issue" so that they can crack down on second homes. --72.23.xxx.xx




Tax Questions for 1st SFH (by 6x6 [TN]) Posted on: Jan 19, 2019 2:48 PM
Message:

Ray-N-Pa,can you elaborate a little? How would one determine how many days a home rented at fair market value? Would this not fluctuate through out the year? What if it was rented below or above FMV than what? What do you mean by cracking down on second homes? Thank you for your time. --73.120.xx.xxx




Tax Questions for 1st SFH (by Ray-N-Pa [PA]) Posted on: Jan 19, 2019 3:45 PM
Message:

If you audited with the second question asked, you would probably be asked to show a written lease. With the first question, they may ask for a demonstration of how it was marketed.

If you have a second home that you use for personal use say 3 months of the year and then you rent it out another 7 months as an off season vacation rental - by asking the questions they were asking and the new ones, would allow them to go after folks who are trying to claim business use of a non business asset. What would happen if the house was rented only twice on FRBO during that other 9 months.

I do like you asking the question about fair market rental value, but that would be rather hard to prove what that value really is. If it falls on the pricing spectrum of rentometer, you should be alright.

--72.23.xxx.xx




Tax Questions for 1st SFH (by 6x6 [TN]) Posted on: Jan 19, 2019 3:51 PM
Message:

Thank you Ray-N-Pa. I forgot about rent-o-meter. --73.120.xx.xxx



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