Tax strategies for rentals

[Nik Moushon]

I have my first rental under contract. Though I understand taxes in a general sense and what to do for my own house I'm in the dark when it comes to whats different for rental properties. What are got strategies to look into and other options I have that I just dont compare to my personal house. So any advice on what to look into would be great. Both specific topics and possibly books or other resources that I can do some learning. Thanks in advance.

[Steve Vaughan]

Originally posted by @Nik Moushon:

I have my first rental under contract. Though I understand taxes in a general sense and what to do for my own house I'm in the dark when it comes to whats different for rental properties. What are got strategies to look into and other options I have that I just dont compare to my personal house. So any advice on what to look into would be great. Both specific topics and possibly books or other resources that I can do some learning. Thanks in advance.

 Congrats going under contract, Nik.  I know you've been looking at a lot of options for a while. Sweet!

Any work you do to it before it's placed 'in service' will be added to your cost basis.  Maintenance and repairs done after it's in service are deductible that (this) year.  In service to me means advertised for rent at least, having an approved tenant pending, better.  If already rented, you don't have to worry as it's obviously already in service.

Another trick I use is I don't replace an entire cap ex, like a roof all at once.  If completely replaced, it has to be depreciated.  If less than, say, 76%, it can be a repair and deducted that year. 

Obviously you'll have buikding depreciation to help tax-wise. On a small rental, cost segregation is probably a waste.  Just go straight line 27.5 years.

Unfortunately all tax pros are suoer busy right now so your stuck with street guys like me.  Hopefully the pros will be available next week.  Congrats again!