Accounting /Tax Question?

Question

We moved to a new state about a year ago and bought 2 STRs as part of our retirement 'plan'. Fast forward to April 2021...I took all the pertinent info to a new Tax guy that was recommended to me. We are under an extension and now he wants more info, that's fine, no problems so far....but here's the question:

He wants separate breakdown for expenses with each STR house. I have them as a single business with one bank account and one set of books. I had assumed I could just give him the P&L /Balance Sheet and that would be good but I keep getting requests for a breakdown for each property...

I understand the need to depreciate the purchase $$ and the part of the the rehab $$ that is Capital Expense, but I'm not getting why I can't expense, for instance, floor refinishing (that occurred at both places) as a single expense. Isn't it all just income v expense like my old construction business? If I built 5 houses in a year, the money all went into one account.....there must be something I'm missing here....?

John Underwood · Answer

There is a schedule E for each property so everything must be broken out per property.

Bruce Woodruff · Answer

Thank you guys....I wonder if the WAVE program I use will do that? I'll check...

Mark Reitman · Answer

@Bruce Woodruff, we use QuickBooks. With one account and one credit card, all revenue and expenses are automatically imported and it takes about a minute or two, each day, to assign them to the right property. It makes it extra simple because your accountant can access it any time if you allow that access, and it's already organized for tax time.

John Underwood · Answer

I have too many properties to have seperate bank accounts for each one. I have one LLC that receives all payments and pay all the bills. My attorney and CPA put their heads together and configured all this for me.

Bruce Woodruff · Answer

Got it, thank you guys! I may get a separate checking account.....I currently only have 2 STRs and may add a 3rd or 4th, but that would be it......record keeping would be so much easier...

Aaron Zimmerman · Answer

Whatever works for you is ultimately what is best. If you can keep up with the transactions, then that's fine. If not, multiple bank accounts is fine too. Having one bank account would probably be simpler though.

Brian G. · Answer

@Aaron Zimmerman what are your thoughts regarding one operating account for all properties vs one for each property (no entity but STRs have a lot of transactions, ie a lot more than LTRs)

Bruce Woodruff · Answer

@Aaron Zimmerman Thank you....I just got the info done. It was extra difficult this year due to moving, selling houses, buying houses, starting the STRs, lots of remodel expenses (standard vs Cap) Gawd what a pain. I think I'll open a separate bank account for each house though, it'll make it a lot easier.....

Aaron Zimmerman · Answer

You could try Stessa and then categorize. What i tell my clients is to do bookkeeping monthly. That way it's not incredibly cumbersome for you and you will be less likely to miss deductions.

Teri Feeney Styers · Answer

@Bruce Woodruff I'm with @Mark Reitman. I don't do STRs but I do flips - all one bank account. But on Quickbooks each property is it's own "class". I can whip through my credit card or Lowe's bill or whatever and assign the various charges to the appropriate class quite easily. Then you can run a "report" and see exactly where you stand on each property: Income & Expenses. The spreadsheet has a column for each property right down to the penny.

Accounting /Tax Question?

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