New to Real Estate....Tax Tips for The Beginner

As your business starts out there will be a lot of questions. Some of those revolve around financing, contracts, market specs, etc. Theres one dreaded area that a lot of RE investors push to the back of their minds....Taxes. Lets face it, most people hate taxes. As an investor taxes should constantly be on your mind. Ive been a CPA for roughly 20 years and practice in all 50 of the United States. Theres a couple of huge factors that make all the difference on your tax return from a client end 1)Organization 2)Education. Ive noticed it is easier for clients to get organized if they know what to organize. Luckily we live in a technology based world thats constantly evolving. Theres multiple apps and programs that are made available to help you track expenses. Ive decided to list a few items below that we see many clients miss out on every year. These are very common in the real estate world and are there to remind you that a little tracking can add up. 

• Common Long Distance Travel- Long distance travel is classified into three sections 1) Purely Personal 2) Purely Business 3) Mixed Business and Personal. If you go on a trip strictly for fun it will unfortunately not be deductible. Purely Business is 100% deductible. The IRS understands that you will need to eat, sleep, travel, rent a car, and accrue other expenses. These expenses will be considered a business expense. . An example of mixed travel would be if you went on a family vacation to Hawaii and you decided to go to business meetings for 1 of the 7 days of your trip. You can then use the 1 day of travel, rental car, hotel, and meals towards the business.
• Local Travel- If you have to drive to a rental property to help a tenant with and issue that mileage is deductible. If you have then have to drive to the hardware store to fix the problem at the rental that is also deductible. All local travel that is for the business needs to be tracked. You can do this by keeping a simple travel log in your glove box or any other program that you chose to you. We will be able to deduct your actual expenses or use the standard mileage rate to make sure that you are receiving the maximum benefit
• Home Office Expense- The home office deduction can be used if there is a designated area that is used to conduct your Real Estate business out of. We will do the math for you and figure out the deduction based on the homes square footage and the square footage that the office is using. We encourage you to keep a record of phone bills, utilities, and office supplies down to a paper clip. A dollar tracked is a dollar deducted. 
• Insurance- With any property comes insurance costs. The premiums are deductible on fire, theft, and flood insurance. If you carry landlord liability insurance that will also be deductible. If at any point you need the insurance and you have a portion of your property harmed by theft or casualty a portion of that loss will be deductible
• Repairs to Properties- Fixing a leaky roof, faucet, or old furnace? Keep track of those expenses as we will be able to help you take that as a deduction. If it is an ordinary and necessary repair to the property make sure to keep receipts and records of what all was needed. 
• Interest- Interest tends to be the largest deduction that we see that real estate investors sometimes overlook. We stress to track all of your loan interest to acquire the property and the credit card interest for the goods or services that pertain to the property.
• Professional fees and Education Costs- The majority of successful real estate investors have a solid team surrounding them. We encourage to keep track of all the costs associated with forming your team. Some professional team members are attorneys, CPAs, property management companies, real estate investing groups, entity formation specialists, and investment advisors relating to the business. 

There are many expenses that go unnoticed by RE Investors. If you are looking to make money; you are also looking to keep money in your pocket. One of the easiest ways to keep money in your pocket is through taxes.