topic Separate Business? in Investors & landlords

Separate Business?

rynlee — Sat, 04 Jan 2020 14:14:23 GMT

Hello, in 2019, I purchased my first rental property. I intend to purchase additional properties in the future and would like these to be under the umbrella of a separate rental property investing business. In the months prior to purchasing my first, I incurred some expenses (e.g. professional development) unrelated to the property itself.

I see that TT allows me to enter income and expenses related to the property in the "rental properties" section. Given what I've said above, should I also set up a separate business? Would I then just enter the expenses unrelated to the first property in that section? And how would I link the income and expenses related to the property in the "rental properties" section to the income and expenses for the business I create?

Re: Separate Business?

Anonymous_ — Sat, 04 Jan 2020 17:41:21 GMT

@rynlee wrote:
I see that TT allows me to enter income and expenses related to the property in the "rental properties" section. Given what I've said above, should I also set up a separate business? Would I then just enter the expenses unrelated to the first property in that section?

You might want to seek an in-person consultation with a tax professional for guidance on this matter.

In general, and as you mentioned, income and expenses related to the rental property are entered in the Rental Properties section of the program. However, expenses entirely unrelated to the rental property are typically not deductible as rental expenses.

Unless you are a real estate dealer and/or provide substantial services in conjunction with your rental property, you report all income and expenses on Schedule E as rental income and expenses.

See https://www.irs.gov/publications/p527#en_US_2018_publink1000219117

Re: Separate Business?

rynlee — Sun, 05 Jan 2020 14:37:49 GMT

Thank you!