@Tristian Cox
Easy does it there. Take a breath. Okay. Thats better. Here ar the answers, ok? Here we go.
Below is a link for Schedule E. Print out Page 1. You don't need page 2. Schedule E is where you report your income and expense. There's about 13 basic expense categories. You'll see them. Using the expense categories, sort out your receipts in piles, like you;re playing Solitaire. Now for each pile, List the receipt amounts on a piece of 8 1/2 x 11 paper. f you want you can number each receipt and then include the number on the summary. Or not. Add them and write the total there. Now enter that same amount on the correct line of Schedule E. Staple your pile of receipts from that category to the summary sheet you just made. Now repeat for the other piles.
Boom. You're almost done!
You said it was a duplex and you;re in half so you have to allocate the insurance, the taxes, and the mortgage interest because the personal part of your interest and taxes is reported elsewhere. Allocate by square footage. There are lots of ways, but that usually the easiest and fairest. Say your unit is 1,200 sq feet and the rental is 800 sq feet. 800/2000=40%, so you allocate accordingly.
Or you can let a CPA take it from there. As long as you have documented totals, you don't need to give me all that stuff. I see you have it. It looks reasonable. I might test its integrity by testing your math. Its a tax return not an audited financial statement.
When you meet with your CPA, or if you email it to him (we are in Southern NJ, not real far from you but have clients from around the country who email us their tax docs) you've done the grunt work already. Be sure to include your settlement sheet as that is usually the starting point for depreciation expense, plus I look for stuff I can write off this year tucked away within the settlement sheet if you know where to look. I do because we specialize in real estate tax accounting, doing work for hundreds of investors, plus being an investor myself, owning a whole string of rentals in 2 counties, and until last year, in Texas, too.
The only other thing to watch out for is the repairs you made. Some things you can write off. Other stuff you depreciate like carpeting appliances, and so on. Make that list and your CPA can determine which is which. I could give you several paragraphs on this topic, but I'm trying to give you the view from 10,000 feet.
One last note - is your brother doing it for free like a good brother? That's nice, but you get what you pay for. Paying a professional like a CPA, who will sign the return and be there if something happens is far safer, plus it keeps your relationship intact with your brother!
Heres the link to Schedule E: https://www.irs.gov/pub/irs-pdf/f1040se.pdf
Lemme know how you do. If you hire a CPA at this point, your blood pressure will be lower, you'll sleep better and you can hang out with your brother. Remember you do this once a year but I do it several hundred times a year. Have a nice night!
Jim Kennedy CPA
