It's tax time, I need some advice...
I found a new accountant to help with this year's taxes and unfortunately he doesn't appear to know a whole lot about rental property taxes. I picked up our completed taxes yesterday and fortunately I know enough about our taxes that I was able to look them over and immediately could tell that several items were wrong. I called the office and was able to come back in to have the items corrected. Since last night, my wife and I have been going over things again and still have some questions I was hoping BP could help with before I confront the accountant again.
One of his first mistakes was he had a new furnace down as furniture and depreciating it for 5 years, 200% declining balance. He corrected it to furnace and when I asked him about the 5 years depreciation, he said it would still be the same. I'm thinking this is considered a building improvement and needs to be depreciated 27.5 years SL? The cost of the furnace is over the $2500 De Minimus safe harbor amount I could claim, so I believe it will need to be depreciated.
Speaking of De Minimus safe harbor, don't we have to make an election as to which safe harbor we're claiming for the year? (Safe harbor for small taxpayers, De minimus safe harbor or Routine maintenance safe harbor). I don't see anywhere included with my taxes where an election was made, not to mention he never asked which one(s) we may be using this year.
Then there's the subject of being a "real estate professional." I know what the qualifications are to be a real estate professional, but I've read that an election may need to made so that I can treat all my rental activities as one activity so that my hours claimed are considered for all my properties versus needing to prove I spent enough hours for each individual property.
I think this particular accountant knows taxes, just not specific things regarding rentals. If anyone can shed some light on these items, it would be greatly appreciated.
Thank you!