BiggerPockets Survey: How Do Real Estate Investors File Their Taxes?

by | BiggerPockets.com

For many, this is a stressful time of year.

As a platform for real estate investment, BiggerPockets knows that investors might have unusual needs when it comes to filing taxes. We decided to survey roughly 200 BiggerPockets members (and real estate investors) with 1-50+ properties to learn how they approach taxes.

Here’s what we found out.

What tax service do YOU use to file? Are you filing an extension this year?

Let us know if you found any of this information surprising—and where you fall on the spectrum—in the comments section below.

About Author

Lauren Hogan

Lauren Hogan is the director of marketing at BiggerPockets. She is an aspiring real estate investor and the person behind any survey, marketing email and general messaging you receive from BiggerPockets. Have feedback about BiggerPockets marketing? Let us know here.

16 Comments

  1. Helen Devries

    Thanks, Really good information.
    Most importantly – How much are you paying in taxes?
    Do you know the profit on each property? Holding, rentals, assignments, rehabs?
    Job costing and custom reporting are very important.
    I work with a group of investors turning 25 properties a year.

    Would love to hear your feedback and what system you are using for accounting? Quickbooks, Spreadsheets, etc?

    These are important topics overlooked.

    Helen

  2. Nathan Carter

    Great article! It is interesting to see the breakdown of properties that are owned by a sample of 200 BP members and their household income levels. New investors sometimes underestimate the monthly/annual expenses of owning a property. The IRS schedule E can be a helpful guide for adding up these expenses before you buy and assessing whether the property will be being profitable. Even if you use a tax professional it is important to understand the tax implications of your investment decisions. The knowledge will make you a better and wealthier investor.

  3. Rick Grubbs

    I have 65 units but still do everything myself with H&R Block in a few hours. The key for me is entering everything as I go through the year in an online spreadsheet my wife made for me. It is already separated by property and expense type. I put receipts in a box as they come in and enter them on the spreadsheet once or twice a month when I am in the mood to do so.

    This also gives me a real time picture of how much we’ve made so far in the calendar year. I like to give a 10% tithe back to God and this allows me to know exactly how much that should be on any given week.

    In January it is just a matter of transferring the totals from the spreadsheet to the tax software. It remembers depreciation for me and lists all the properties automatically. I actually kind of enjoy it!

  4. I would be interested in knowing the percentage of BP investors who report their rental income on their personal tax return versus having a separate business EIN tax return.

  5. Ron Takeda

    That’s interesting data – Thanks.
    From those who changed from using Turbo Tax to using a tax professional – could you summarize the benefits of using a professional? Can a professional improve on the bottom line? For me using Turbo Tax allows me to be completely familiar with every detail of my taxes. But I do wonder if I’m missing something.

    Thanks Ron

  6. Lauren, good review of what to look for at tax time. I’m surprised that your survey shows zero clients doing their own tax returns! I know that’s not right; somebody forgot to include an “do it yourself” option in your survey questionnaire! I’m pretty sure it’ll be over 10% doing it that way. Many of us are good with spread sheets, and just load our bank statements into sheets every month, and allocate items to each each property; in 6 hours every March I’m all done loading a final Sched. C that I dummy up on a spread sheet. I’ve been doing that for years, for eight properties, 100 tenants. Keeps me real close to the profit makers and losers. Every real estate investor needs to learn to make their spread sheets sit up and dance. If you’re using more than 2 days on your return something is wrong with your system. There’s lots of on-line resources, and try your local community college if you need help. Seattle Socrates

  7. Lauren, good review of what to look for at tax time. I\’m surprised that your survey shows zero clients doing their own tax returns! I know that\’s not right; somebody forgot to include an \”do it yourself\” option in your survey questionnaire! I\’m pretty sure it\’ll be over 10% doing it that way. Many of us are good with spread sheets, and just load our bank statements into sheets every month, and allocate items to each each property; in 6 hours every March I\’m all done loading a final Sched. C that I dummy up on a spread sheet. I\’ve been doing that for years, for eight properties, 100 tenants. Keeps me real close to the profit makers and losers. Every real estate investor needs to learn to make their spread sheets sit up and dance. If you\’re using more than 2 days on your return something is wrong with your system. There\’s lots of on-line resources, and try your local community college if you need help. Seattle Socrates

  8. John Murray

    I use a CPA and my wife gathers all the info. Must be doing something right I made over $250K in tax year 2016 and Fed and state tax liability was less that $2K. BRRR is a great tax shelter. America what a country! All you W-2 people thanks!

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