All Forum Posts by: Dan V.

@Makhwarand Khan    Business use of car can be deductible in 2 ways, actual OR standard mileage. The standard mileage rate is subject to certain rules and you must choose to use it on the first year you have the car then on later years, you can choose between the 2 methods whichever will give you the most deduction. Please note that you will only able to deduct to the extent of your business mileage so it is important to keep track of your business & personal mileage if you use the car for both. There are good apps out there to help you track your mileage. 

To answer your question, no you cannot write off the whole purchase on your tax but only the allowed depreciation expense for the tax year for you car. Please see this IRS topic for more info. 

If unsure, always consult a CPA for proper guidance and tax strategies. 

@Matthew W. Any repairs done before the property is placed in service are capitalized. Any repairs other than routine maintenance done after the property is placed in service is subject to  capitalization rule, which is to capitalize the payment if it prolongs the life of the asset or improves its value. However, you also have the option to elect to use the de minimis safe harbor rule to make it more simple. Per IRS, the de minimis safe harbor is simply an administrative convenience that generally allows you to elect to deduct small-dollar expenditures for the acquisition or production of property that otherwise must be capitalized under the general rules.

Consult with your CPA for property guidance!

@John Vietmeyer You can deduct expenses only when the property is placed in service.  Here is the IRS publication regarding residential rental property which also defines when the asset is considered "placed in service" and with examples too. 

The property can be considered placed in service even before a renter is put into the property. Consult with your CPA for proper guidance.

@Ben Bradmon Jr Since you bought the property, you can depreciate only to the extent of what you paid for the depreciable property. In your case, you will need to split the $22K between land and building. For example, if you use the county appraised value of 69K ($32.4K or 47% for Land and $36.6K or 53% for building) then your allocation will be $10,340 for Land and $11,660 for the building. The rehab costs is a separate depreciable asset so figure out how you can depreciate those (depends on what was done). As other said, there are different ways to allocate the costs, so to maximize your depreciation, pick the "allowed" allocation that will give more value to the building. 

@Martin Robertson Use the Plus version. It is recommended for multiple properties. 

@Matt Henshaw Check out  Daniel Hymann.

@Heather Miner It is recommended to have different QBO for each entity but if you prefer to do it both in one QBO account, I would setup the LLCs as "Location" and the properties as "Class" and the tenants as customers. You can breakdown further by creating a subclass for the units. 

The Location feature has a limitation, you cannot use it per line, that means when you happen to pay something for multiple properties, you will only be able to assign the whole transaction into one location. So it's recommended to use the Class tracking for the properties instead. 

Quickbooks is a good software, if it is setup properly for your business model. Things also need to be entered in a certain way in order for the setup to work correctly. 

@Melanie McDaniel has monthly meetups for BP members in Hampton Roads area and also an active member here in BP.

You can still deduct car loan interest provided you deduct only that portion related to business use of the vehicle. The argument is that car loan interest is not included in the  "actual expense" list so you can deduct it on top of the standard mileage rate, and IRS does not allow car loan interest specific for personal use but nothing was mentioned about the business portion. 

I'm not a tax expert so don't take my word for it. I would leave it to the expert here in BP if they agree or disagree with me. :)

@Mary Gallardo For flip business, direct costs (acquisition, rehab materials & labor) and indirect costs (taxes, interest, insurance, etc.) that are properly allocable related to development and construction of the property are capitalized. Indirect costs not related to development and construction of the property can be expensed such as marketing/advertising, general & admin expenses. Holding costs (taxes, interest & insurance) can be deducted after the property is placed in service or ready for sale. 

I would recommend reaching out to CPAs specialized in real state industry for proper guidance.