Legally, W-2 process and collecting rent, Fort Lauderdale

General Landlording & Rental Properties
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Legally, W-2 process and collecting rent, Fort Lauderdale

John R Behrns
Rental Property Investor · Fort Lauderdale, FL · Member since 2018 · 1 post · 0 votes

Good afternoon BP,

2018 I purchased my first property… Two bedroom two bath in sunny South Florida. I've spent the last two years fixing it up and getting it rental ready. I've come up with excuses in this process: it's nice to come home, you will rent it, it takes time, you need more education on being a landlord... I potentially have a great tenant lined up, stable job, stable income and it would be wife, husband and mother-in-law. I understand the need to still do background checks and have everybody sign the lease and rental agreement but I am having trouble wrapping my head around filing taxes, write offs, do I need an LLC, do I pay myself... how do I make this legit legal so I use the right systems moving forward.

I appreciate everybody’s time and what a great opportunity to have all this knowledge in one room :) 

Thanks,

John 

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Bradley Sriro
Licensed Realtor & Investor · Miami, FL · Member since 2015 · 164 posts · 124 votes
5y

@John R Behrns take a deep breath LOL... you are really overthinking this. Overthinking can sometimes be your worst enemy. If you don't have an LLC, then you would simply count the rents collected as income on your tax return. If you open an LLC, you would in essence do the same thing since it is a pass through entity. You do not need an LLC though... it is your preference.

Since you have had the property for 2 years now without a tenant, I would get the tenant in place so you can stop paying unnecessary holding costs. You are losing money every month that it is not rented. There are plenty of books out there that can guide you in terms of allowable write offs. Figure this out after you get the tenant in place though. You are suffering from analysis paralysis right now and it is costing you money.

Check out: J.K. Lasser's Small Business Taxes 2020 or 2021

Another good book that is really good when it comes to tax strategies is "What Your CPA Isn't Telling You" by Mark J. Kohler

Finally, you can't go wrong with the Bigger Pockets book by Heather and Brandon Turner "Managing Rental Properties"

My advice is to stop overthinking and just get it done. The rest will fall into place and you can learn as you go. All the best!

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  • Bradley Sriro
    Licensed Realtor & Investor · Miami, FL · Member since 2015 · 164 posts · 124 votes
    5y

    @John R Behrns take a deep breath LOL... you are really overthinking this. Overthinking can sometimes be your worst enemy. If you don't have an LLC, then you would simply count the rents collected as income on your tax return. If you open an LLC, you would in essence do the same thing since it is a pass through entity. You do not need an LLC though... it is your preference.

    Since you have had the property for 2 years now without a tenant, I would get the tenant in place so you can stop paying unnecessary holding costs. You are losing money every month that it is not rented. There are plenty of books out there that can guide you in terms of allowable write offs. Figure this out after you get the tenant in place though. You are suffering from analysis paralysis right now and it is costing you money.

    Check out: J.K. Lasser's Small Business Taxes 2020 or 2021

    Another good book that is really good when it comes to tax strategies is "What Your CPA Isn't Telling You" by Mark J. Kohler

    Finally, you can't go wrong with the Bigger Pockets book by Heather and Brandon Turner "Managing Rental Properties"

    My advice is to stop overthinking and just get it done. The rest will fall into place and you can learn as you go. All the best!

    1Reply
  • Ahad AliPro Member
    CPA/Investor · Bronx, NY · Member since 2018 · 236 posts · 45 votes
    5y

    First and foremost, get a tenant. Having the property for 2 years with no tenant must have riled up your expenses (did you report those expenses on your tax return for those years? If not you may be able to amend your returns to include expenses for the rental property.) Regarding the write offs, there are various expenses that can be written off so long as they are pertaining to the rental property itself and not a personal property. It really isn't necessary to have an LLC especially at this stage but you can always open one up. If your looking into purchasing more properties for business use then perhaps an LLC would be more beneficial but once again, it is up to you and your preference.

    Before filing your taxes, get in touch with an accountant or CPA who is well versed in Rental Properties and discuss in detail so that you can maximize your deductions.

    It may seem like a huge complicated process but I assure you it is very simple once you get the hang of it. Being your first rental property, I can understand how overwhelmed you feel but it is important to not let the pressure get to you. You will do just fine once things are in motion. Good luck with this and your future ventures!

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  • Basit SiddiqiBusiness Member
    Accountant · New York, NY · Member since 2015 · 8k+ posts · 3k+ votes
    5y

    @John R Behrns

    If the property was not in livable condition for 2018 / 2019 tax year, you should not have reported them onto your return(contract to an above poster).

    Those costs get capitalized and would be reported in the year that the property is rent ready.

    You have a good amount of questions and it may be best suited to work with a professional to help you with your filing.

    [email protected]917-280-8544
    Basit Siddiqi CPA4.979 Reviews
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