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Updated over 7 years ago, 08/17/2017
Personal and rental tax separation question
I bought a 2 family house and live in one of the rentals. Renters pay own utilities minus water and sewer. I created a security deposit and a personal account dentoted as a rental income checking account.
My next move is to either use the debit acct for house repairs and expenses or even get a credit card for the property.
My tax advisor said that I need to show expenses coming from the rental income account. He said you want that number to decrease so he said to pay my mortgage, utilities, repairs from there. Since I will be short on funds there he said to put in money from my private personal account to help pay the difference.
If I am adding money from private personal account to the rental income account then it makes it just as confusing in my opinion, and if I have a vacancy I will then have to change back to paying from my private personal account. My thoughts were that I should just keep a spreadsheet of my expenses, and leave the rental income alone.
Ultimately here is the question. Is his advice just bookkeeping or will it mean I can't deduct my mortgage interest and expenses if I pay from personal when it comes to taxes with the system I am using.
From this point on I will start paying water, sewer, any repairs from the rental account because that makes sense. But again it seems just to be bookkeeping.