Hi I bought a home in January this year , paid for some updates and rented it out in May (located in Tennessee). What should I do to prepare for the upcoming tax filing season? This is my first year as a landlord - how do I prepare myself for real estate depreciation, deductions and lowering my tax ? Should I request any sort of documents besides the receipts from my contractors? Thanks!
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Hello,
For rental property you will need to keep track of your rental income and expenses for the property.
Keep tax forms and supporting paperwork related to your income, expenses, home, and investments for at least three years after filing. After that, the statute of limitations for an IRS audit generally expires.
You will depreciate the house ( over 27.5 years), which the program will help you through. You may also have other expenses or capital improvements that will either be depreciated or expensed.
3. The cost of trial runs and other tests
4. The cost of reconditioning used equipment
5. Financing costs if a company borrows funds to construct an asset
6. Labor, sales taxes, transportation, and materials used in the construction
7. Repair-type expenses incurred before the asset is placed in service
This link will explain how to report the rental income and expenses on the tax return along with depreciation and other useful tips.
Hi John - thank you for your response! To depreciate the house that I just bought in January ( over 27.5 years), do I need to do anything or keep any paperwork to prepare myself for the upcoming tax season? Appreciate any tips and advices! Thanks
To depreciate the house you will need
1. Date purchased
2. Date available to rent
3. Cost basis (purchase price plus certain closing cost)
4. You will need to have the cost basis broken out into 2 pieces house and land. You can usually get the breakdown on your property tax bill.
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