Powered by Max Banner Ads 

Record Keeping for Real Estate Investors

Thank you for revisiting you can still subscribe to my RSS feed. As Always Thank You for visiting!


 Powered by Max Banner Ads 

An investor needs accurate records of his or her rental income and expenses to prepare the investor’s income tax return.

                The following items should be recorded to collect required income tax information for each individual property:

·         Rental Income/Capital Expenditures

·         Rental

·         Expense

·         Additional Information

·         Sale of Rental Property

On the rental income form, enter all rents received even advance rents.  However, security deposits are not classified as rent.  Once the deposit is converted into paid rent or damages then it is calculate as rental income.  If the tenant performs services or the tenant pays for repairs and the investor compensate him or her through reduced rent, include the value of these services as rental income.  In addition, the investor will be entitled to an equivalent deduction for the expenses.

                Upkeep and maintenance of the property are considered rental expenses.  In addition, the cost of labor paid to contractor to maintain the property for the investor is a rental expense, as well. The payment to the contractor is income for the contractor; therefore, as an employer the investor needs to collect the social security number of the contractor so that the investor can withhold and pay employment taxes for the contractor.  The contractor will need to fill out W2 form.      

                Another expense that the investor will have is travel.  Travel include going to the rental property to collect the rent and trips to deposit the rent into the bank.  For mileage, keep a log. 

                Capital expenditures are expenditures that improve the useful life of the rental property.  Purchase of furniture or appliances for the tenant’s use are capital expenditures, as well.  These items may have a useful life of over one year and need to be depreciated.  For example, the difference between repair and replacement of a roof determines whether the item is an expense or capital expenditure.  If shingles on a roof is replacement, but not the whole roof replaced then the work is a deductible expense; however, if the entire roof is replaced then it is a capital expenditure because it extended the useful life of the property.

                If the property is used for both personal and business use then expense will need to separate between personal and rental use.  The interest, taxes, insurance, and utilities are partially deductible expense. On the other hand, repairs to the rental property are fully deductible expenses.   To determine the investor’s personal expenses, a business use percentage will be determined and this amount will be applied to the partially deductible expense to calculate the personal expense.

                Accurate recordkeeping will help the investor ensure that him or her get credit for every deduction that the investor is entitled too.  It is also important to keep receipts and payment records of all items listed.  Lastly, keep all records and closing papers of rental properties bought and sold.

 

 

Originally posted 2008-12-18 02:22:43. Republished by Blog Post Promoter

Blog Traffic Exchange Taylor-Brown's Related Post s' Related Posts Related Websites

About admin

Serena Brown is broker and owner of Taylor-Brown Real Estate. She is the author of this blog. She has also co-authored a book entitled Should I Short Sale My Home. She has authored a e-book How to Sell My Home. She will be authoring a book on real estate investing by April of 2010 and several reports. She has dual degrees in Business Administration and Electronic Engineering Technology. She prides herself on being up to date on all trends, news, and education related to real estate to include short sale, loan modification, etc. She also makes sure her clients are abreast of how these changes will affect them financial. Therefore, stay tuned for great information in 2010.
This entry was posted in real estate and tagged , , , . Bookmark the permalink.

8 Responses to Record Keeping for Real Estate Investors

  1. Pingback: How to Find Financial Stability in Unstable Markets — P2P No Bank

  2. virus guard says:

    awesome blog I’m so glad I stumbled here through my friend’s blog I’m gonna definitely have to add this one to the blogroll

  3. Inspite of numerous opinions, better researched articles still bring in subscribers like me. You presented complete understanding of the theme matter and my sentiments are now complete after reading your post. Please preserve up the delightful work and i will subscribe to your rss feed to be advised of any inflowing postings.

  4. Thank you alot, for sharing this great post!
    Here, I found a youtube video about watching tv online that I would like to share: international Tv Online.
    but seriously, great post and thanks alot !
    i look forward to your next article !!

  5. Excellent ideas here, have emailed my mum so expect a big reply!!

  6. Security says:

    Hello webmaster I like your post ….

  7. Thank you for your help!

  8. I loved what youve accomplished right here. The pattern is stylish, your material classy. However, youve gained an edginess to what youre offering the following. Ill definitely arrive again for far more when you maintain this up. Dont shed wish if not as well a lot of folks see your vision, know youve gained a fan correct listed here who values what youve gained to say plus the way youve presented yourself. Fine on you!


 Powered by Max Banner Ads