Administrative Assistant · Grand Prairie, TX · Member since 2015 · 9 posts · 2 votes
So my husband and I just closed on our very first rental property. We purchased the house for 90k, are going to put in about 15k, ARV around 125, and should be able to rent out the property for around 1250-1300 a month. We will probably not be able to put a tenant in to the property until the beginning of january but I was wondering about how taxes work on a rental property. Since we bought before the year and all our rehab and costs will be counted for this years taxes, is there any tax breaks that come with a rental? I obviously will be working with a CPA on my taxes this year but was just wondering what to expect.
When you visit your accountant, make sure to bring your closing statement from escrow, since some of the closing costs and fees may be deductible. ALso, keep track of all rehab expenses, mileage to and from the property, Insurance... basically anything that relates to the property as an expense.
You will get to deduct some depreciation(although not much this year, since it's so new)
Your CPA will be well versed in rental property deductions.
Your deductions may be VERY limited for 2015 if the property required a major rehab and is not rent ready by the end of the year. In fact, you may not have any deductions for 2015 if the property is not put in service during 2015 - but this can vary widely based on facts and circumstances. Make sure your tax preparer is highly knowledgeable regarding all the intricacies of a property that requires a significant level of rehab and what is deductible vs what is added to basis.