Schedule E & C

[Carol Lyons]

Hi BP Members,

I currently own a multi-family and I am claiming my direct expenses using the Schedule E for repairs, depreciation, etc. However, I need to keep my expense low on the Schedule E for bank purposes; I am hoping to purchase another bank financed property in the next year.

I have a lot expenses from traveling to Investor groups and training materials that are not a directly related with my property, but are business expense (if things go well I will have my first rehab project in the next couple of months). Can I use a Schedule C for these expense even though I have not officially created an LLC?

How would people claim these expense?

-Carol

[Richard Flanders]

You do not have to have a business name to do a schedule C. If you have no income, but expenses traveling, etc., you can only claim a loss for two years on your Schedule C. After that, your loss, if there is one, is zero according to the IRS.  

For the Schedule E, it is my belief that all the expenses of buying the house, up to the first tenant moving in, go to the Basis of the house, as the IRS likes to call it, and will go to Capital Gains when you sell it. All the expenses after the last renter moves out and the closing osts, are subtracted from the Sales Price PLUS the Depreciation taken to date. Then the sales (basis) and the purchase basis are subtracted to provide the Capital Gain. Now to your question. If you just show the expenses from the First renter through to the last, that would be accurate in my opinion. you do not have to show all the expenses since purchase against Rental Income, just the expenses during the rental period.

I have Apps for that. Search Android for GPSAPPGENERATOR and 4 apps will appear, Financial Statement, Schedule C, E and F. They are a buck. Try one out.