tax question - Posted by SS (mi)

Real Estate Investing
#1

Posted by JHyre in Ohio on November 18, 1998 at 15:18:51:

  1. Tax Lawyers are usually much more aggressive than Tax Accountants by training. Tax Lawyers are also usually much more expensive than Tax Accountants. Don’t take this to mean that ALL Tax Accountants are not aggressive- I speak only in probabilities. My view of the probabilities is also skewed by the fact that I AM a Tax Attorney!

  2. John T. Reed (any hisses from the audience?) puts out an excellent piece called Aggressive Tax Aoidance for Real Estate Investors. The Bureau of National Affairs (“BNA”) puts out a piece called Tax Management Portfolio 505, TRADE OR BUSINESS AND FOR PROFIT-ACTIVITY DEDUCTIONS. BNA 505 can be found in most law libraries, is VERY detailed and VERY dry reading.

Deduction law is complicated and HEAVILY dependent on your specific circumstances. The general rule is that if you pays the cash, you gets the deduction. Unfortunately, the law is also filled with more exceptions than I can mention here. Once you do find an AGGRESSIVE advisor, tell him ALL the facts. The advisor cannot claim a deduction for an expense that is unknown to him.

#2

tax question - Posted by SS (mi)

Posted by SS (mi) on November 17, 1998 at 21:13:15:

Any tax gurus out there? I am not terribly happy with my CPA’s aggressiveness on business expenses. In addition to normal business expenses (ie equipment and maintenance for my rental properties) what else can I be expensing (for example travel, meals, car expenses). I feel like rich dad would be disappointed in my ability to deduct my expenses. Any reference material on this subject?

#3

Re: tax question - Posted by Dave T

Posted by Dave T on November 17, 1998 at 22:54:46:

By all means, consult your tax advisor for a professional opinion. That said, I like to be as aggressive as the tax law will allow. I claim any expenses directly related to the acquisition, maintenance, and management of my rental property. Auto maileage to visit/inspect the property, management fees, advertising, supplies, maintenance, repairs, postage are all costs of business. Yes postage. I send my tenants a registered letter for their lease renewal or notice of security deposit forfeiture upon vacancy, and take the postage as a deductible expense. I am not sure that you could make a good case for deducting meals given the current tax rules, unless some travel was involved. For example, a couple of years ago, I travelled to another state to purchase a property. My travel, hotel, and meal costs were all claimed as expenses on my Sched E insofar as they were related to my investment activity.

The best tax deduction does not really come out of my pocket – that’s the depreciation I am allowed to take on the property.