Taxes: When can I start doing tax write offs?

[Justin S.]

I'm currently reading about taxes and deductions with real estate. I'm wondering when I would be able to start writing off things. I currently do not have any properties, but I am preparing my business ahead of time by collecting important forms and getting educated. Let's say I did one of the following: buy a computer for looking for properties, bought a file cabinet for bookkeeping, go to lunch with real estate agents to help plan my business, drive to look a potential deals. When is it okay for me to write these business related things off? Do I need to have a deal already in place to be considered a business that can write Things off? Do I need any kind of business license? Do I need to be making profit?

[Joe Splitrock]

@Justin S. the answer is yes, but it is handled differently than someone who already owns properties. There is a special category for Startup Expenses. There are limits for what you can deduct in a certain year. Any expenses you want to claim prior to the day your first rental property is put into service (rent sign in yard) must be claimed as Startup Expenses not operating expenses. I recommend you read the below links. First is a NOLO overview on startup expenses, second is a detailed IRS document on rental property and third is IRS document on startup expenses. Hire an accountant to handle this properly.

http://www.nolo.com/legal-encyclopedia/deducting-e...

https://www.irs.gov/pub/irs-pdf/p527.pdf

https://www.irs.gov/pub/irs-pdf/p535.pdf