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Posted over 9 years ago

Get Ready for Tax Season Now with These 4 Things

In continuing with sharing tips for rookie investors, I can't help but not talk a little bit about tax season and how that impacts you as a buy and hold investor.  To be honest, when we (my hubby and I) bought our first rental property, keeping records for taxes never even crossed my mind.  Although there were many things that didn't cross my mind, as I was completely clueless to the world of real estate and finances before we started this journey.

Accordingly, this is why I want to share with you a few things that you should start to think about, organize, and collect for the upcoming tax season.  Keeping track of these various items throughout the course of the year can help tremendously in alleviating stress when your CPA is knocking at your door for your taxes. 

1.  Expense List- If you own rentals you essentially have a business. Whether or not you have created an LLC or any other business entity you are able to write off expenses.  So, keep track of expenses related to your rentals-gas, meals, contractor service calls, lawn maintenance,etc- so you can give this information to your CPA.

2.Rent- You will need to report your gross rent for the year.  I recommend keeping track of all of your monthly incomes and expenses in one place.  Some people use Excel, others use software like QuickBooks.  We use Excel, but we also use an App on my iPhone called iSpending.  This way I can input information no matter where I am.  The best part is I can export the spreadsheets when it's time to send our tax information.

3. Real Estate Tax Record- You have to provide your CPA with your annual taxes on your property. This can come from two places. If your taxes are escrowed then you can find them on your mortgage statement.  If your taxes are not escrowed then you have to provide the tax statement from the county/municipality. It usually is mailed to you, but you can also find it on most county websites. 

4. 1098- This record shows the amount of interest you have paid with your mortgage payments over the course of the year. It is usually supplied by the bank that services your loan.

At the end of the day, you should talk with whoever does your taxes every year.  They will probably require more records or documentation and the earlier you talk to your contact the more prepared you can be when it comes to be that time of year.  

Happy Investing! 



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