Accounting and Taxes for my first rental property - Tips?

Question

Hello All!  I recently purchased my first investment property - its a 3-family and I am living in one unit.  I am doing a major renovation to the rental units before I rent them out.  Anyway, I was wondering, do you know of any good resources regarding bookkeeping and taxes?  I want to keep everything organized and make sure I maximize my tax savings.  I am thinking of buying Quicken Rental Property Manager... Also, please don't say talk to an accountant/cpa lol Thanks!

Harrison Harner · Answer

I just finished up my first year owning a rental property and went through my first tax season as a business owner. I also did a major renovation on one apartment. The first step is to understand what will count as a write-off, what won't, and what you should track. For example, "improvements" won't be written off entirely this year, but you will want to keep track of for depreciation and capital gains reduction if you decide to sell. Be sure to get a good understanding of "improvements" versus "repairs" for the course of your renovation.

I set up a separate checking account for my business expenses, tracked it on Mint.com, and set up categories based on their tax category. Now, as long as I check in occasionally to make sure expenses are going in the right category, I can easily total up certain types of expenses. Tracking vehicle expenses for business versus personal requires a little more attention.

In the end, I had a CPA file my paperwork and it was reassuring to have him available to answer my questions. Otherwise, Google was my biggest resource.

This strategy seemed to work for me so far, but I'm also interested in the advice of the more experienced.