New Real Estate investor here in the process of starting out.
I know that once I own a property any operating expenses, travel etc. are tax deductible but does anyone have any insight into collecting receipts for business meetings and recording mileage relating to starting up investing and buying a first property?
My intention is to buy a first property this year but there's a chance it could slip into next year.
Thanks in advance for any help.
@Chris Ready if you start a business and you incur expenses during the operation of that business you can deduct those expenses on your Schedule C. If you are trying to deduct lunches with your friends/business partners and mileage to drive around your city looking for a house to buy you really need to consult with your CPA. Are you in business or are you trying to find a deal?
Thanks for your input.
It's the latter scenario. No business but finding a deal.
I figured it would be more of a CPA question but wondered if anyone had an experience with this situation.
Business losses can be carried back 2 years and forward 20 year for tax purposes. So for the expenses you incur initially, keep track of them and carry them forward to years where your can offset them against income your business generates. Of course, all the appropriate expenses caps/exclusions apply as discussed by rob above.
The answer to these types of questions can vary so much based on the details of your individual scenario, but it sounds like you don't have a business. Rather, you're just shopping around for your first rental property. If that's the case, then no I don't believe you could deduct the things you're asking about (mileage, meetings, etc). Real estate investments like this are generally considered a passive activity as opposed to a trade or business (in which case you could deduct these types of expenses). So, essentially, you need a property to attribute these expenses to, and without one you don't have anything to deduct against.
As others have suggested, you could always consult your tax professional for more specific advise based on your individual situation.
by the way, business milage for 2015 is $0.575/mile
Meals and entertainment can be trickier. Make sure business is the main point of the meeting, keep a record of what you discussed in case of an audit and consult with your CPA. Also, you may want to check out the IRS website. They have a lot of good stuff.
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