Do all fees need to be assigned to a single property on sched E?

4 Replies

I am a new real estate investor.  I am starting to look at taxes and have a question about Schedule E.  I have some expenses that I have incurred this year that do not coincide with a single house that I am still hoping to add to my overall expenses on schedule E.  These include the purchase of signs for advertising, tools for maintenance and driving to see houses that I did not end up purchasing.


Should I randomly assign these to another house just to make them fit on schedule E?  Should I call my type of rental property: 8 (other) and then describe that it is for things that do not fit to one specific property?  What do most people do in this situation?


Any advice would be extremely appreciated.


Thanks!

Originally posted by @Will Ellis :

I am a new real estate investor.  I am starting to look at taxes and have a question about Schedule E.  I have some expenses that I have incurred this year that do not coincide with a single house that I am still hoping to add to my overall expenses on schedule E.  These include the purchase of signs for advertising, tools for maintenance and driving to see houses that I did not end up purchasing.


Should I randomly assign these to another house just to make them fit on schedule E?  Should I call my type of rental property: 8 (other) and then describe that it is for things that do not fit to one specific property?  What do most people do in this situation?


Any advice would be extremely appreciated.


Thanks!

 Items purchased like advertising signs and tools - I divide evenly over my properties - So if I spend $100 and have 10 properties I put $10 per property on the schedule E

Business mileage gets deducted as an itemized deduction

If you are not going to use an accountant, I suggest this book.  It is easy to understand and will cover all your questions

https://smile.amazon.com/Every-Landlords-Tax-Deduc...

Brie Schmidt, Real Estate Agent in Illinois (#471.018287) and Wisconsin (#57846-90)

Thanks for the fast response!  I will definitely check out the book.  I assumed that I would expense the mileage on line 6 of schedule E and did not realize it could be a deduction from my taxable income.  Probably won't be very helpful for me since I will likely just use the standard deduction.

@Will Ellis

Yes, you distribute all general business overhead expenses between existing properties. Most of the time, it's evenly split between them, unless there is a reason to allocate the bulk of a deduction to a specific property. 

Do NOT create a "dummy" property with no rent for this purpose. I know some people who enjoy IRS audits, but not too many.

Business driving is deducted on Schedule E, not as itemized deductions. Unless you track your miles per property (it would be very compliant, but not very practical) - divide driving evenly between the properties, as well.

I do not enjoy IRS audits so I definitely appreciate your insight.  Good to know I can evenly split this, that is ridiculously less complicated than every other option I was trying to think of.

Thanks so much for the help!

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