2014 Taxes - DONE!

I had planned on blogging more about market rents this evening, but Bruce and I just finished our 2014 taxes.

Last year we had to pay a sizeable amount, mostly due to our poor planning. This year we are getting back a small amount. We aim to pay just a little bit each year; getting and planning for big returns are a pretty inefficient savings plan.

We use Quicken to track our individual expenses and TurboTax to file our taxes. I have an Excel file I update monthly to see revenues and costs by type and by property and to help project the rest of the year and into the future. Some people hate using Excel or lobby for a more automated solution. I work with numbers and Excel all day as a financial professional, so Excel suits me fine.

The first year we added the rentals, TurboTax had a series of questions it asked and I wasn’t at all prepared. I took notes and created a TAX tab that has the information summarized the way we need it for taxes, in the order that it is input for taxes, so it only took about 30 minutes to add the rental portion to our return this year.

For example, I group maintenance, unit preparation, and yard maintenance into Cleaning & Maintenance. Meeting an applicant at Starbucks or going to coffee to discuss rental issues is groped under Professional Meetings.

All of our generic costs are proportioned back to the properties for tax purposes. As is the interest on the (family) loans we have that aren’t tied to a specific property. We’ve decided to not allocate any interest costs to one property so that our tax returns show us owning it free and clear, in case we want to get a loan at it in the future.

Calculating taxes in the spring and paying a healthy chunk of any earnings to the IRS are facts of life. We like to get it done and move forward.