Tax Deductions for Investment Property

[Catie Baker]

Hi everyone, question around tax deductions for investment properties. We purchased our first investment property last year and just met with our accountant to file our taxes. He informed us we cannot deduct any of the expenses related to the property due to us not being full time real estate professionals. And if we were full time, there are income limitations. He is not a real estate specific CPA and this is the first we have ever heard this, and we have taken a boot camp and listen to the podcast religiously. Is this correct??

[Jack Gray]

Hi Catie, I'd say it's time to find a new accountant who specializes in real estate.  

Regardless of whether you qualify as a "Real Estate Professional" for tax purposes (by having 750 or more hours of work in the field during the calendar year), your expenses related to the property should at least offset income from the property.  Whether any losses after depreciation can be used to offset your W2 income is a different question, and will depend on your adjusted gross income for the year an other stuff, so seek out a CPA who can advise you based on your exact situation.  

My CPA has saved me quite a bit over the years on my rental properties (https://arnesen.cpa/) and is helping me with a cost segregation study currently to accelerate depreciation on one of my rental properties.