Rental income and expenses; IRS publication

[Yuriy Skripnichenko]

Hi all,

I came across this IRS publication with detailed explanation on to how to treat expenses for your rental property. Including depreciation and including rental of vacation homes. 

Here is the link https://www.irs.gov/pub/irs-pdf/p527.pdf

I think every buy and hold investor should know it and this publication is a good guideline before you go to your accountant with numbers.  

[Paul Passafiume]

This might as well have been written in alien code, and I have many degrees.  The IRS should be ABOLISHED. 

I have a single member LLC....my accountant tells me all my tax deductions are taken in depreciations. For example, I spent about 160 grand in real estate in 2017 and probably 40 grand improving it ( I have exact numbers in tenantcloud.com) I collect about 50 grand a year in rent on these properties after general expected annual expenses (NOI). To make math simple, I spent 200k this year. I make 50k a year on it. Can I assume in 4 years, for IRS purposes, I will "make my investment back," and in the fith year, the IRS sees that 50k as additional income? I do real estate investing on the side.

So if I make 400k in my day job, and 50k in real estate income in year five, will the IRS treat me as having 450k in income, and thus tax 450k at the marginal rate for my income bracket? 

Thanks!