Rental property/ business expenses Qs

[John T.]

Hello BP, We bought and rented our first investment property last year. It is in our personal name (no LLC) and we did our taxes for the first time. We were keeping track of our business expenses, particularly our auto and home office expenses, but we were told by our tax preparer that we couldn't deduct those because they are not expenses that related to the "actual rental property." Here are our questions: 1. If we only have one rental property and we actively drive our personal car to look for future investments (in addition to running errands directly for our current rental), can we legally deduct those expenses? Do we need to have an investment business to claim those investing related deductions? We treat our rental endeavors as an investment business. 2. If we do all our own bookkeeping, landlording, and investment research from a specific location in our house (house office), can we claim the home office deduction even if we only have one rental property? 3. What is the difference between owning a rental and investing in buy and hold rental properties? Thanks for your help!

[Andreas W.]

@John T.

Definitely get a new tax preparer for next year. Get someone who is demonstrably knowledgeable with real estate investments. I also recommend to get the Nolo's "Every Landlord's Tax Deduction Guide". It is very explanatory so that you can talk intelligently to the person doing your taxes. Yes, you can deduct expenses for your general rental activities.