Tracking Expenses for Tax Purposes

[Lucas A Riemens]

I am looking for advice on how best to track and structure my expenses to get the most tax benefits. Currently my wife and I own two properties in the Cincinnati OH area and have just completed the renovation of our 3 family which we live in the first floor of. We use this as our home, office, work shop, and storage for both properties. We did a fairly extensive rehab of the first floor; kitchen, bath, and floors along with the usual paint etc. Our second property will be getting some foundation work done as well as a full exterior paint and some general touchups inside. Each home is set up under a separate LLC what I am trying to figure out is how I should track/categorize expenses for the greatest tax benefit.

Thank you

[Natalie Kolodij]

Originally posted by @Lucas A Riemens:

I am looking for advice on how best to track and structure my expenses to get the most tax benefits. Currently my wife and I own two properties in the Cincinnati OH area and have just completed the renovation of our 3 family which we live in the first floor of. We use this as our home, office, work shop, and storage for both properties. We did a fairly extensive rehab of the first floor; kitchen, bath, and floors along with the usual paint etc. Our second property will be getting some foundation work done as well as a full exterior paint and some general touchups inside. Each home is set up under a separate LLC what I am trying to figure out is how I should track/categorize expenses for the greatest tax benefit.

Thank you

For tracking that renovation I'd talk to your tax pro and then set it into a spreadsheet honestly. 

For that 3 family ...

You're going to have a few allocations. ... 

Renovations/repairs before/ after in service may need to be split 

Renovations that impact the entire building need to be split between business and your personal residence 

if you have a dedicated home office IN your personal residence that's another allocation for business use. 

Each home being in a separate LLC is kind of a PITA.

You need a separate bank account and separate set of books for each LLC/ property.

There is no tax incentive based on llc/ setup. 

Talk to your pro though BEFORE you do renovations/ buy / sell ect- as there may be tax strategy to put into play.