Every Landlord’s Tax Deduction Guide

✍ Scribed by Stephen Fishman J.D.

• Publisher: NOLO
• Year: 2018
• Tongue: English
• Leaves: 465
• Edition: 15
• Category: Library

✦ Synopsis

Maximize your tax deductions

Rental real estate provides more tax benefits than almost any other investment. Every Landlord’s Tax Deduction Guide is the only book that focuses exclusively on IRS rules and deductions for landlords.

The book covers the new tax law, including the new 20% pass-through deduction and other deduction and depreciation changes that are particularly beneficial to landlords. Learn about landlord tax classifications, reporting rental income, hiring workers, and depreciation.

Find out how to:

handle casualty and theft losses
distinguish between repairs and improvements
deduct home office, car, travel, and meals
keep proper tax records―and much more.

Filled with practical advice and real-world examples, Every Landlord’s Tax Deduction Guide will save you money by making sure you owe less to the IRS at tax time.

This new edition is completely updated to cover the new Tax Cuts and Jobs Act.

✦ Table of Contents

Cover......Page 1
Title Page......Page 4
Table of Contents......Page 8
Introduction......Page 14
1: Tax Deduction Basics for Landlords......Page 16
How Landlords Are Taxed......Page 17
What Is Rental Income?......Page 22
How Income Tax Deductions Work......Page 23
How Property Ownership Affects Taxes......Page 28
2: Landlord Tax Classifications......Page 42
The Landlord Tax Categories......Page 43
Business Owner Versus Investor......Page 44
Are You Profit Motivated?......Page 52
3: Deducting Your Operating Expenses......Page 60
Requirements for Deducting Operating Expenses......Page 61
Operating Expenses That Are Not Deductible......Page 68
4: Repairs......Page 70
IRS Rules: Repairs Versus Improvements......Page 71
How to Deduct Repairs and Maintenance......Page 101
5: Depreciation Basics......Page 108
Depreciation: The Landlord’s Best Tax Break......Page 110
Understanding the Basics......Page 113
How to Depreciate Buildings......Page 119
Depreciating Land Improvements......Page 135
Deducting Personal Property......Page 138
Section 179 Expensing......Page 154
When You Sell Your Property......Page 163
Tax Reporting and Record Keeping for Depreciation......Page 172
6: Maximizing Your Depreciation Deductions......Page 174
Determining the Value of Your Land and Buildings......Page 175
Cost Segregation......Page 185
7: The Pass-Through Tax Deduction......Page 200
You Must Have a Pass-Through Business......Page 201
You Must Have Qualified Business Income......Page 202
You Must Have Taxable Income......Page 204
Calculating Your Pass-Through Deduction......Page 205
Strategies to Maximize the
Pass-Through Deduction......Page 210
8: Interest......Page 212
Interest Landlords Can (and Can’t) Deduct......Page 213
Mortgage Interest......Page 214
Other Interest Expenses......Page 217
Points and Prepaid Interest......Page 219
Interest on Construction Loans......Page 221
Loans With Low or No Interest......Page 222
Loans on Rental Property Used for Nonrental Purposes......Page 223
Limitation on Interest Deductions by Landlords Earning $25 Million or More......Page 224
9: Start-Up Expenses......Page 226
What Are Start-Up Expenses?......Page 227
Determining Your Business Start Date......Page 229
How to Deduct Start-Up Expenses......Page 232
If Your Business Doesn’t Last 15 Years......Page 236
If Your Business Never Begins......Page 237
10: The Home Office Deduction......Page 238
Qualifying for the Home Office Deduction......Page 239
Calculating the Home Office Deduction......Page 244
Simplified Home Office Deduction Method......Page 249
IRS Reporting Requirements......Page 250
Deducting an Outside Office......Page 251
11: Car and Local Transportation Expenses......Page 254
Deductible Local Transportation Expenses......Page 255
The Standard Mileage Rate......Page 259
The Actual Expense Method......Page 262
Reporting Transportation Expenses on Your Tax Return......Page 268
12: Travel Expenses......Page 270
What Are Travel Expenses?......Page 271
Deductible Travel Expenses......Page 276
How Much You Can Deduct......Page 278
13: Hiring Help......Page 282
Deducting Payments to Workers......Page 283
Employees Versus Independent Contractors......Page 285
Tax Rules When Hiring Independent Contractors......Page 289
Tax Rules for Employees......Page 298
Hiring Your Family......Page 301
Hiring a Resident Manager......Page 306
14: Casualty and Theft Losses......Page 310
What Is a Casualty?......Page 311
Calculating a Casualty Loss Deduction......Page 313
Repair and Replacement Costs for Casualty Losses......Page 318
Tax Reporting and Record Keeping for Casualty Losses......Page 320
15: Additional Deductions......Page 322
Education Expenses......Page 323
Insurance for Your Rental Activity......Page 326
Legal and Professional Services......Page 328
Meals and Entertainment......Page 330
Taxes......Page 331
Unpaid Rent......Page 333
16: Deducting Rental Losses......Page 336
What Are Rental Losses?......Page 338
Overview of the Passive Loss Rules......Page 339
The $25,000 Offset......Page 343
The Real Estate Professional Exemption......Page 349
Deducting Suspended Passive Losses......Page 368
Strategies for Dealing With the Passive Loss Rules......Page 371
$250,000/$500,000 Annual Loss Limit......Page 373
At-Risk Rules......Page 375
How to Deduct Rental Losses......Page 377
17: Record Keeping and Accounting......Page 380
What Records Do You Need?......Page 381
A Simple Record-Keeping System......Page 385
Accounting Methods......Page 402
18: All About Schedule E......Page 404
Who Must File Schedule E?......Page 405
Filling Out Schedule E......Page 406
19: The Net Investment Income Tax......Page 418
How the NII Tax Works......Page 419
Real Estate Professional Exemption From the NII Tax......Page 423
Planning to Avoid the NII Tax......Page 426
Index......Page 428
Additional Landlording Resources at Nolo.com......Page 465