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Updated about 5 years ago on . Most recent reply
To take a loss? Break even? Or take a profit? -Come tax time
Hello everyone, I fully understand that every situation is different because of personal income, rental income, differing states/taxes and even marital status plays a roll. I believe that I have a strong grasp on taxes in general but adding in rental income is throwing me for a loop. I'll provide some background information about myself to better explain my question. I'm single (not married) so my standard deduction is $12k, I have about $100k AGI and I live in New York (aka we pay tons of taxes on that income $34k to be exact which includes Federal, State, SS and Medicare). I should also add that I have no children so come tax time, I barely get anything in return. I decided to get into real estate because I wanted a tax shelter and obviously to make cash flow.
I currently own a house that I live in and closed on a duplex on Halloween. I have collected 2 month's rent since then and have accumulated almost the same amount in repairs/supplies, utilities, and mileage. My question is "simple" - Should I be aiming to "take a loss", "break even" or "take a profit" from my rentals? I realize come tax time, I will also have my interest, property taxes and other write offs like donations and such. I'm estimating my total write offs will be around $15k which is obviously above the standard deduction, therefore I will be itemizing. There are other things I could "buy" that would be considered "repairs" (roof, carpet, drywall, etc) but I'm not sure if I should just wait until next year (2020). As of right now, excluding my property taxes, interest and donations I'm dead even with repairs and utilities compared to my gross income on my rental.
I hope this makes sense. Thanks in advance