Tax & Accounting 101

[Batool Hussain]

I am looking to buy my first property and not sure where to start with Tax & Accounting questions as out of state investor. I will have to travel to other states to look at properties - this quickly adds up $$$$$ (travel expenses) as my search area is relatively widespread - Ohio, PA, Kansas/Missouri and Florida. 

My question is when is the right time to open an LLC - shall I open it right at the beginning? Will I be able to claim these expenses? I am a single earner on a W2 so trying to limit my expenses as I start my journey.

What would happen if I open an LLC, and am not able to buy a property in 2023?

[Jeff Nash]

You are in start up mode and this would be good to review - https://www.irs.gov/newsroom/h....  If you end up purchasing a rental property this year you would likely be able to deduct those costs up to $5k and amortize the rest over 15 years (I assume this is not going to cost you more than $50k).  For organizational costs, I don’t think it would be necessary to set up an entity at the outset, but that depends on how you are going to finance the property and a few other variables which a tax advisor/attorney would need to know in order to properly advise.  If you are not a real estate professional (likely not because of the W-2) then these losses might not be deductible against your active income unless your adjusted gross income is low enough to qualify for the $25k exception.  Anyway, this might not make sense to you yet, but review that link and some other posts made on this subject here on BP.