First year as a rental property owner-- Tax Questions

Rental Property Investor · Columbus, OH · Member since 2021 · 231 posts · 188 votes

I bought my duplex back in September 2022, but did not get the other side rented out until March 2023. Since this is the first year I will have rental income, what are some things to look for with taxes? Such as tax breaks/write-offs? Also should I get in contact with an investor friendly CPA asap? I have always done taxes myself but since I own a rental property now I know I will need help with taxes. I have been tracking income/expenses through Avail property management software. Would love all and any input about taxes as a real estate investor and what to expect. TIA!

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Julien J.

Investor · CO · Member since 2016 · 757 posts · 1k+ votes

Yes, hire a CPA.

I'm a CPA and I use a CPA who has the expertise (and time) to handle my affairs.

Couples things that will come up:

- Depreciation expenses (my favorite non cash)

- When the unit was placed in service will determine when to allocate expenses to the rental unit rather then when it was rented. Might even be able to start earlier if you rehabbed it with the intention to rent it.

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Marc RiceBusiness Member
Real Estate Agent · Columbus Cleveland Dayton, OH · Member since 2018 · 2k+ posts · 1k+ votes
3y
You should get with a CPA asap. I believe a key deadline is September 15, 2023 for some 2022 filers.
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Julien J.
Investor · CO · Member since 2016 · 757 posts · 1k+ votes
3y
Yes, hire a CPA.
I'm a CPA and I use a CPA who has the expertise (and time) to handle my affairs.
Couples things that will come up:
- Depreciation expenses (my favorite non cash)
- When the unit was placed in service will determine when to allocate expenses to the rental unit rather then when it was rented. Might even be able to start earlier if you rehabbed it with the intention to rent it.
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Nathan MillerPro Member
Property Manager · Grants Pass, OR · Member since 2009 · 429 posts · 202 votes
3y
+1 to CPA recommendation. They will know about tax breaks that will take you a long time to research. If they find just one tax break you might have otherwise missed they should pay for themselves.
Not sure about Avail, but most property management software is going to provide the exact report about Schedule-E based expenses that your CPA needs to complete your taxes. Software should also help you track all depreciable assets, although your CPA will also do this.
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Julio GonzalezPro Member
Specialist · West Palm Beach, FL · Member since 2008 · 4k+ posts · 1k+ votes
3y
@Thomas O'Donnell

Real estate has so many tax benefits and credits available, that I always tell people it's crucial to have a CPA that's extremely knowledgeable in this area. This would be an excellent question for them. I have worked with a number of great CPAs over the years and would be more than happy to provide you with recommendations if you'd like?

561-253-6640
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Thomas O'Donnell
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Rental Property Investor · Columbus, OH · Member since 2021 · 231 posts · 188 votes
3y
Quote from @Julio Gonzalez:

@Thomas O'Donnell

Real estate has so many tax benefits and credits available, that I always tell people it's crucial to have a CPA that's extremely knowledgeable in this area. This would be an excellent question for them. I have worked with a number of great CPAs over the years and would be more than happy to provide you with recommendations if you'd like?

I would love some recommendations, thank you!
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Julio GonzalezPro Member
Specialist · West Palm Beach, FL · Member since 2008 · 4k+ posts · 1k+ votes
3y
@Thomas O'Donnell I'll message you to connect!
561-253-6640
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Aaron ZimmermanBusiness Member
Accountant · Chicago, IL · Member since 2018 · 2k+ posts · 1k+ votes
3y
Yes. Biggest things to be aware of with a house hack (at least that's what I'm inferring from your post):
1. Correct allocation of expenses for personal use (the side you're using for your primary residence) and rental use (the side you're renting out).
2. Making sure you have all your main deductions (insurance, property taxes, mortgage interest)
3. Repairs vs capex - this will be a major item to be aware of for your property.
4. Getting your basis correct (this will impact how much depreciation you'll get)
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