Sole Proprietor and Taxes

[Michael Salamone]

I just purchased my first investment property. It is a duplex with a tenant already living in one side. I set up a separate bank account to have the tenant deposit the rent into. I also had an agent give me the tip that I also “pay myself rent” each month to start saving money. Therefore, if rent is $1,000, then I will also “pay” $1,000 to this account. My question is: is this wise with respect to reporting for taxes given I am a sole proprietor? Or am I making it appear like I am making more on the side that I really am?

My other question is what can I expect for tax benefits at the end of the tax year? I’ve been pouring money into this property for updates, and saving all of my receipts so far, but what will my first year look like?