Welcome to BP, you will find a ton of great people with information to help. I will start by saying that I am not a tax professional, but I am sure one will answer this post that is more qualified that I on this topic. I will just cover some of the basics that I have learned. My wife and my income is close to yours but the breakdown is a bit different. I would say that we are $250K from our W2 and $100K from our rental business. The first bit of advice I could recommend is to hire a CPA that knows real estate to ensure you are not missing the easy things. Then get good at learning what you can and can’t deduct. When we got our CPA we followed up with a few different friends that also had rentals and funny enough they recommended us to the same CPA. To get to where we are financially, we hadn’t outsourced much because we didn’t want to spend the money. Taking the leap to hire someone felt a bit awkward but it’s been a great investment and was much cheaper than I thought it would be. We paid $560 last year to get our taxes done. I think $150 for our personal taxes and $410 for the business. In addition, he answers all sorts of questions for me throughout the year and doesn’t charge us for that.
I see many of my friends leaving way too many expenses on the table. We aren’t very big, we only have 5 properties 7 doors, but the tax deductions as part of our business are a huge way to retain our income to reinvest and grow. The easy ones are depreciating the property, deducting mortgage interest, and deducting property taxes. Where I see people falling short is not tracking all the little expenses that add up for the business. I also see people not tracking mileage or all their mileage. Mileage comes into account not just going to the property but also going to the bank or the store. I’ll give an example on possible deductions that people overlook. We purchase most of our cleaning supplies for our rentals from Costco. Our membership for Costco is the business membership which is a deduction and my mileage to go to Costco to purchase rental supplies is a deduction. Those things while it may seem small add up. My cell phone is for the business, so we deduct it as a monthly expense. We have a home office which our CPA lets us deduct up to $1,500 per year. When we go to look at prospective rentals we deduct the mileage. I always work with my CPA first before logging a new type of expense on my books because somethings are okay and some are not. He has educated me on multiple things since we started. Just to provide one example: I took a business meeting with someone who was looking for funding for a new subdivision development. A friend of mine and I went to meet him at a local golf course and then we talked more about the opportunity over lunch. I asked my CPA if I could deduct the expenses for the meeting. He told me I could deduct the meal and mileage but not the golf because that was considered entertainment. Just having the CPA allows me to ask these types of questions to make sure I am maximizing my deductions but following the law.
I have more examples to share and discuss if interested just DM me. Hopefully this helps.