Posted by Garrett Sutton on April 11, 2005 at 10:28:20:
Certainly you could set up an entity to manage your properties. Monies from your properties would be paid to this entity for the services rendered. From these monies you could deduct your office and ad expenses. Of course, you could also deduct these expenses through your property holding entity as well. The key is to use these expenses to reduce your taxable income. Good luck, Garrett
Real estate investing buisness for tax reasons - Posted by Gene
Posted by Gene on April 09, 2005 at 17:58:26:
I am a full time investor. I have office, and advertising expenses. I plan on reporting this as a “investing buisness” to the IRS.
The problem is that I have no income that isnt covered buy either rent or capital gains. So I woulnt have any income or loss to report.
Should I still set it up as a buisness to get the writeoffs??
Re: Real estate investing buisness for tax reasons - Posted by Jimmy
Posted by Jimmy on April 11, 2005 at 11:35:21:
You don’t need to set up an entity to capture these expenditures. What you need is good accounting control procedures.
Every (RE-related)expense you incur should be tagged property. The expenses will be one of the following: (a) an operating expense associated with a rental property in-service, (b) an expense associated with a property not in service, but held for investment purposes, or under renovation , (c) an improvement to a rental property in service, (d) an improvement to a property not in service but held for investment, or under renovation, or (e) overhead expenses not directly associated with a particlular property, but business-related anyway.
The (a) items are deductible in the current year.
The items in (b)should be added to the basis of the property (or capitalized, as we tax geeks say). If you place the property in service later (i.e., rent ot out), you can start depreciating the basis. If you sell the property, but never place it in service, you get to add the expenses to your cost basis.
The items in (c) are capitalized and depreciated.
The items in (d) are capitalized.
The items in (e) need to be allocated in a reasonable manner. You have some discretion here. This includes phone bills, car expenses, travel, etc.