Brand new investor - House Hacking, what is deductable

[Dan Graney]

Greetings,

I have read many times that getting a good accountant would be one of the first things to do as I step into the world of real estate investing. I found one but he told me since I bought my first property on December 23 2015 it would not be worth the money I would pay him to do my taxes this year, I can just do them on my own.

I have done this many times in the past but I have a few questions about what is deductible from 2015 that led up to the purchase of my first investment property.

Going to try to keep this brief, thank you in advance for any advice

Are these deductible:

Rich Dad course which lead me to bigger pockets

Bigger pockets book and Pro subscription

Home purchase cost above and beyond what is normally deductible for a purchase of a home. Since I am doing a house hack am I considered to be "buying a business asset" at the same time as I am buying a residence. Specific example, I had to get an inspection on this property, this will probably not be a deductible expense for the home purchase. Can I write off half of the cost because of half of the house is going to be an income asset?

Also when am I considered to be "in business". Was told by the accountant that I do not need to get an LLC yet. Am I in business once I start pursuing a career as a real estate investor, just prior to Rich Dad course, or am I only in business once I buy an asset.

[Jon Rusnak]

@Dan Graney 

Congratulations on the purchase of your investment property.  

I'd have to look further at the rules for the deductibility of the course, BP book and subscription however to answer the question on whether or not you can deduct a portion of your expenses, it depends on what those expenses are for.  In the example of the inspection I would think you'd be able to deduct the portion relating to the business. You'd have to come up with a reasonable method to carve out the business piece, for example if you bought a duplex and each unit was similar size then 50% may be an appropriate percentage to deduct. But if you bought a four unit building with units of similar size and lived in one of the units then you could argue 75% of the cost is deductible. 

I pulled the information below from the IRS website.  

"Generally, you cannot deduct personal, living, or family expenses.  However, if you have an expense for something that is used partly for business and partly for personal purposes, divide the total cost between the business and personal parts.  You can deduct the business part."