Filing taxes for rental property (first timer)

[Eric Lee]

Hi Everyone,

I closed on my first rental property at the tail end of last year, and had tenants moved in for about a month.  Given that this is my only investment property, and it was owned for such a short amount of time last year, I've been on the fence about whether I need a CPA, or if I'd be able to handle filing taxes on my own with TurboTax (curious to hear others take on this).

I decided to test out TurboTax first to see how I do.  So far I've run into a few questions (some probably pretty basic ones).

• Closing costs - In this section in TurboTax, I wasn't certain about some of the terminology they use vs. what I see in my closing documents.  Are my assumptions below correct?
  
  • Abstract and Recording Fees = origination fee?
  • Land survey = appraisal fee?
  • Transfer tax = recording fee?
• Repairs vs. CapEx - I had two large windows in the living room replaced prior to tenants moving in. I believe this would be categorized as CapEx and be depreciated instead of entering as an expense, is that right?
  • In TurboTax I entered the amount for this in the section for remodeling costs.  Do I need to separately enter it as an asset to be depreciated?
• Property tax and insurance - If I only owned the property for 2 months last year, do I only enter 2 months worth of tax/insurance as expenses?  I paid 12 months of insurance as a prepaid item during closing.
• Loses - After entering everything, I showed a total net loss of $3463, and a deductible loss of $450.  Is this because my total income last year was close to 150K, so my rental property losses are not deductible from my overall income?  If so, will these 2017 losses I cannot deduct carry over to 2018?

Appreciate any feedback you can provide.  Thanks!

Eric

[Dave Toelkes]

@Eric Lee,

I agree with @Michael Plaks.  

I have geen landlording for over 30 years, I am very conversant with the tax code as it applies to my rental activity, and I am a seasoned TurboTax user.   Due to my experience, knowledge of the tax code, and comfort with different capabilities of various versions of TurboTax, I am very comfortable doing my own tax returns with TurboTax. 

Because you are a first time landlord, first time filing a Schedule E, and the questions you are asking suggest you are not very familiar with the jargon and terminology used in the real estate and mortgage lending business, I strongly suggest you use a professional to prepare your tax returns, both state and local.

The real value of a CPA is not to prepare a tax return, but rather, the tax planning advice the CPA can offer for your investment strategy throughout the year.  If you wait until filing season to hire a CPA, it is too late to do effective tax planning or to develop an effective tax avoidance strategy.