Attn Tax Professionals! Need guidance with business tax write off

[Marc Estepa]

As a landlord currently managing properties, everyone says that you are running a business. In doing so, do you get all the traditional protections and tax write offs as any other business owner?  

Doing my taxes last year, my former tax professional mentioned that I can take two trips a year to visit my properties out of state and to list their costs as a business tax write off.   

I only own two properties out of state currently, but how many different tax write offs are you allowed as a business owner? Do I need to create an LLC or have a business license in order to be official?

Up until I found BP about 4 months ago, I had no idea what I was doing.  I own properties I had purchased from previous duty stations and loosely managed them from out of state. 

Now that I’ve been enlightened on how to properly run this as a business, I have revamped everything.  I am doing more video calls, I’m revamping my book keeping, I've dedicated a separate room as a home office and basically spending more time properly running this business the way I should’ve years ago.  

As a result of spending a lot more time running this as a business - can I write off certain business expenses outside of two trips a year to visit my properties?  

For example, I purchased a new laptop and have purchased different software to help automate my systems for landlording.  I’ve purchased a desk, better lighting for video business calls and even set up a separate cellphone line dedicated for real estate alone.  Are these business tax write offs?  I’ve heard of people writing off a portion of their mortgage because a bedroom was dedicated as a business office.  

Mine isn’t exactly a glamorous business office as it’s the only space I could set aside in the house for some privacy.  It’s basically the dog’s room with tough boxes stacked on one another with a laptop in the corner of the house.  Does that count?!

Just looking for guidance on what’s allowed and what isn’t when it comes to tax write offs as a business owner.   

[Bob Norton]

@Marc Estepa You can deduct any expense for running your rental business that is customary and necessary.  The expenses you mentioned (laptop, software, desk, dedicated cell phone, etc.) appear to all be acceptable business expenses.  There are no limits to the number of visits to your rental properties that you can deduct.  However, there must be a business purpose for the deduction.  Make sure you document each trip as to why it was necessary for you to visit your property, in case you get audited.  You can deduct a portion of your home expenses as a home office for your rental business. The office space needs to be a space used exclusively for your office, so you should remove any non-business items from the room.

[Marc Estepa]

@Bob Norton, thanks! BP has opened my eyes so much that I am currently in the process of rehauling everything with regards to my finances.  I wish to God I had found BP years ago.  Things would be so much more different.  

[Jeff Stein]

@Marc Estepa

@Bob Norton is correct. Any expense of the business counts. It is important to keep good record. There are many different options available. You can do it yourself or hire an accountant/tax specialist to help maximize your personal and business returns. Feel free to PM if you need any more help.