Level 15

Investors & landlords

I may ask around for a local CPA first. Do you know how much do they usually charge?

Last time I paid a CPA to do my taxes was back in 2003 and it was $120. I'd expect it to be at least triple that now. You may find it cheaper to sign up for TurboTax Live for your 2020 taxes. That gives you phone access to a certified CPA that, while they won't do your taxes for you, it enables you to do things like have your return reviewed by a CPA prior to filing it. There's also the ability for live online video chat sessions with a CPA and if you want, you can even give them access to the tax return you're working on. Just understand that TurboTax is a "self-prepared" program. So a CPA is not going to complete and/or sign the "Paid Preparer Use Only" section of the 1040.You can check out what TurboTax Live gets you at

I am always afraid to claim depreciation on my tax return.

You state that like you think you have a choice. You don't have a choice. You are required by federal law to claim depreciation. If you don't claim it, then in the year of sale you are required to recapture the depreciation you "should" have taken, and still pay taxes on it.

I am so worried when I sell my property it will come back and bite me

It will. No doubt about that. But it may not be as big a bite as you may think. Here's a rough synopsis of how it works.

You purchase the property for $100,000 and rent it out for 10 years. At the end of 10 years you have taken lets say, $25,000 in depreciation. You'll also got a fair amount of those other carry over losses. Now lets say for the sake of argument that your other carry over losses are $25,000.

You sell the property for $200,000 after ten years. The original cost basis on the property was the $100,000 you paid for it. Now reduce that cost basis by the $25K of depreciation taken and that makes your adjusted cost basis $75,000. That means you have a $125K gain.

Now subtract your other carry over losses of $25K from that gain, and now you have a $100K taxable gain.

I do 15 years loan

That could be a good thing. Once you pay off the mortgage after 15 years (assuming you keep the property that long) that means there's not more interest deduction. So if (and that's a really big *if*) the property starts showing taxable income at tax filing time, all those prior year carry over losses will be used to reduce that taxable rental income. Probably reduce it to zero the first few years.

So if you reach retirement age and retire in say, 2035, you sell the property for a $100K taxable gain, take your minimum required distribution from your retirement account, and you're taxes won't be that much different than they were the year prior when you were working.

What if I open a new saving/checking account and put the money there.

Not a bad idea. But it's really not necessary. If you're planing to put say, $15K down payment on your next purchase, just make sure you're balance never goes below that until the day you make that down payment.

There's quite a bit of info in the link I sent you via PM. I suggest you take a break and read it through. But like I said, my writing skills are not all that great and it may seem haphazardly organized. That's because it's a first draft, and it "is" haphazardly organized. 🙂