structuring accounting and tax receipts for single dwelling with multiple addresses

[Brandon McCombs]

Hello,

I'm closing on my 2nd property next week. It happens to be a 9 unit building, 2 units of which are commercial. It is situated at a 4 way intersection. The 2 commercial units have their own addresses (313 and 317 Market St.). Physically in between the entrances to those is a stairwell that leads to 6 apartments on the 2nd and 3rd floors. Those are all under 315 Market St. And then for some reason there is an apartment that is accessible from the other street so that's the 4th address for the same physical building.

I am wondering what is required from a tax perspective and what is recommended from a sanity and business perspective for tracking expenses and reporting them to the IRS due to the different addresses? My wife and I plan to use Quickbooks for tracking expenses and income. I plan to make each unit a separate entity (I believe Quickbooks calls them classes) in the software for tracking rent and expenses per unit.

But should I also report on them for tax purposes as 9 separate units or should I roll them up into 4 because that's how many separate addresses there are or should I roll everything into 1 property on the schedule C come tax time because it's one physical building with one mortgage, etc.?

Any recommendations?

As background info, my first property was a house with a garage apartment so I have been tracking those 2 units separately and reported them separate to the IRS because they not only have separate addresses but they are physically separate dwellings despite 1 mortgage payment, etc. Should I continue to apply that to this multi-unit building? And, as a hypothetical, in the event that I get another multi-unit building in the future that truly has a single address, other than apartment numbers, how would you answer the same questions for that situation?

thanks