Make Plans Now for Tax Preparation Ahead
Post from MilitaryByOwner
As the calendar days of 2017 draw to a close, I have to ask, does your online newsfeed include tips and hints for the upcoming holidays? From meal planning checklists to gift buying suggestions, it seems you’ll find plenty of ways to prepare for the festive celebrations ahead.
However, before you set your focus on the turkey or the tinsel, if you happen to be a landlord, now is the time to review the end of the year paperwork tied to your rental property. Consider the following points to stir a sense of organization before the shiny New Year begins.
Track Your Paper Trail
Just how neat is your nest? Inspired by organizing tips, I’m choosing to tackle the mess on my office desk. I’ve done a good job of keeping every tidbit; now I have to make sense of it all! Sorting through the receipts and documents from my rental home, I’ll separate each batch of papers into its own sleeve in an accordion file folder. For example:
- Bank statements highlighting direct deposits of rent payments
- Invoices from routine landscaping, pool maintenance, and pest control service
- Receipts from repairing the leaky faucet and fixing the wobbly ceiling fan
Besides the joy of finally cleaning up my workstation, I’ll know where to look when I’m on the hunt for an important piece of paper. If you have the notion to tidy your home office nook, gathering together your important papers is a big plus. By compiling your rental income records and expense receipts now, you’ll feel at ease when tax time nears.
Consider Your Deductions
If you own a rental unit, you’ve most likely had to complete several repairs throughout the year. From a broken window blind to a leaky faucet, it seems like there is always something that needs fixing. While tracking those receipts you might wonder which expenses are tax deductible? Take a look at this list:
- Mortgage Interest – Loan interest
- Taxes – Personal property taxes
- Annual Depreciation – Wear and tear with use
- Repairs – Fix-it projects
- Maintenance – Tasks with upkeep
- Insurance – Policy premiums
- Utilities – Services you’ll cover
- Travel – Accommodations to/from
- Property Management Fees – Management company fee, HOA fee
- Professional Counsel – Obtaining legal advice or tax assistance
Additionally, MilitaryByOwner’s Landlord/Tenant ebook explains that any expense that exceeds what you’re earning in rent can be tax-deductible. Having a sense of order with the paperwork from your rental, you’ll be able to document your expenditures and claim your deductions when filling out your tax forms.
Collect the Forms You’ll Need
While sorting through the papers tied to your rental residence, your goal is ready the documents you’ll need when it’s time to file your taxes. If you have questions in mind, consider setting up a meeting with an accountant or tax advisor. By scheduling a consult with a professional now, you’ll be ahead of the game. Prior to your appointment, think about collecting the following items.
- Federal and State Tax Returns from last year
- Form W-2 – Wage and withholding data from an employer
- Form 1099 – Miscellaneous income data
- Form 1098 – Mortgage interest statement
- Form 4562 – Depreciation deduction
With your rental investment in mind, you’ll present your income records and overhead charges. From charitable donations to deductible expenses, you’ll showcase the receipts and statements you’ve carefully compiled. Check the IRS website for more information on rental real estate income, deductions, and recordkeeping.
Rather than delaying the task, you’ll find it’s beneficial to assemble the paperwork from your rental property before the end of the year. Compile documents now, tie up any loose ends, and track down any misplaced receipts. When your records are in order, you’ll face less stress and feel more inclined to enjoy the holidays!
Note: This article is for informational purposes only and not meant to be legal advice. Check with an accounting professional for specifics regarding your own tax situation.