Postponing rent collection to lower taxes

[Luna B.]

I need to lower my rental income for this year due to some other income coming in.
I know I can prepay certain expenses at the end of the year since I do cash based accounting. Now I am wondering if would work to have my tenants
post date their December 2015 rent to be Jan.1 2016.
I realize this would make my rental income higher for 2016.

[Linda Weygant]

@Luna B.

 Here is what I would recommend for lowering your taxable income:

1.  As others have suggested, do some repairs to the properties.  Upgrade appliances, put in ceiling fans, fix EVERYTHING that needs fixing.

2.  If you have earned income, maximize your retirement contributions if you are not already.

3.  To reduce state income taxes (but not federal, unfortunately), consider whether a College 529 plan makes sense for any dependents you may have.

4.  If you have bonus or commissions at work, ask them to defer paying you until January.  Those are acceptable deferments.  Rent payments - not so much.

5.  If you've got a medical procedure you need to have done, but have been putting off, see if it will make sense to have it done now.  These cannot be elective procedures such as plastic surgery, but can be things like smoking cessations programs, dental work, laser eye surgery, braces for children, etc.

6.  Increase your charitable contributions.  This might be a great time to clean out the garage, the attic, the basement, etc.  If you've got a vehicle that's all paid off and have been thinking of getting a new one, consider donating it to one of the many charities that make excellent use of vehicles.

7.  Prepay 2016's property taxes in 2015.  Talk to your mortgage company about this if they are escrowing the property taxes.  This works for personal residence as well as rentals.

8.  Same with insurance

9.  If you pay the utilities on the rentals, consider prepaying them by several months

10.  Thinking about solar panels?  This might be a good idea (for your personal residence only) and you can get a pretty decent tax credit for it.

11.  If your kids are in daycare and you are not already maxing out your dependent care credit, consider pre-paying some of your day care expenses in December.

12.  Have a dog of an asset you are thinking about unloading?  Stock in some poorly performing company, perhaps?  Sell it and take up to $3000 loss.

This does have the downside of making 2016 a higher net income year than it otherwise would, but if your goal is really to focus only on 2015, these are all legal and legitimate strategies that will absolutely pass the sniff test of any IRS auditor.