# Rental Property



## Launchpad McQuack (Jan 8, 2019)

I realize that this post is kind of off topic for this forum, but there are some posters here that generally give pretty good advice and have indicated in the past that they have experience with rental properties and rental income, so I would like to pick your brains.

Back in April 2016, I bought a condo with the intent of renting it out to generate rental income. I basically paid cash for it, but technically I had a mortgage. I had initially made an offer that was under asking price with the benefit for the seller that it would be a cash transaction with no need for mortgage approval. The seller countered my offer by offering to issue me a small very-short-term mortgage himself if I paid the full asking price and paid the rest in cash. So I ended up with a mortgage from the seller that I paid off in full about two months after closing. So the property has been paid off in full since approximately June 2016.

I had some problems right out of the gate that prevented me from renting the condo out as I had originally planned. About a month after I bought the place, the roof started leaking and causing water damage. Since it is a condo, the roof is a "common element" and I can't repair that myself. I have to go through the condo association for any repairs to the common elements. Well, the condo association is kind of shady and they don't want to do anything for you unless you are on their pet list. So getting the roof repaired was a long drawn-out process. Combine that with me getting really busy at my day job and just being lazy sometimes, and the end result was that the condo sat vacant for a long time instead of being rented out and generating income like I had originally planned.

Finally in 2021 (5 years after I bought the place), I got a fire lit under my butt and got all the water damage repaired and got the place prepped for a tenant. My first tenant moved in on November 1, 2021 and things have been going pretty well with him so far. There have been a few minor repairs that I wasn't expecting, but he pays rent reliably on time and I am finally generating income off of this property instead of it being a money sink.

So now that I am finally renting the place out like I had originally planned, I am trying to educate myself on the details of reporting this income on my taxes. I filed the paperwork for a 6-month extension on my 2021 income taxes, so my taxes aren't due until October 15, but I am starting to get serious about getting them done. I don't want to wait until the very last minute.

I have done some searches online, but nothing that I have found online provides a very good comprehensive guide. It is bits and pieces of information here and there, and most of it is vague and doesn't go into the specifics that I would like to see. I am going to start reading IRS publications tomorrow and see if they clear things up for me. In the interim, though, I thought I would post a thread here and see what pointers people can give someone in my situation that is declaring rental income for the first time. You know, what are the pitfalls? What are the things that people are likely to do wrong? This forum has been pretty good about pointing me in the right direction in the past. I wouldn't have started keeping a mileage log as soon as I did if it weren't for this forum. I am wondering if the fact that the property sat vacant from 2016 to 2021 affects the way taxes are handled in any way.


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## Atavar (Aug 11, 2018)

I would suggest that getting tax advice here will not be the smartest thing you have ever done. Consult a tax professional. While you are talking to them ask about the benefits of forming an LLC. You can put the property and your rideshare in the LLC and protect yourself and your savings from all kinds of bad legal stuff.


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## Uber's Guber (Oct 22, 2017)

Launchpad McQuack said:


> there are some posters here that generally give pretty good advice













Atavar said:


> I would suggest that getting tax advice here will not be the smartest thing you have ever done. Consult a tax professional.


@Atavar just gave you the best advice you can hope for from here. This forum is littered with career Uber drivers who are so poor they couldn't pay attention. Do you really want to rely on tax advice that comes from some random Uber driver who probably lives in his car?!?


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## Rampage (8 mo ago)

Get an accountant. A good accountant won’t cost money…it will save/make money.


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## bobby747 (Dec 29, 2015)

Every year I use one...


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## Bulls23 (Sep 4, 2015)

Collect all invoices and receipts for any work done on your rental and give them to your CPA when taxes are due - they will figure it out for you.


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## tohunt4me (Nov 23, 2015)

Bulls23 said:


> Collect all invoices and receipts for any work done on your rental and give them to your CPA when taxes are due - they will figure it out for you.


But . . . You can only go back 3 years to amend return tax forms 
The Go over. Can go back 10 years.

Which is why they Often wait 3 years to pull an Audit.

So, file losses on condo immediately.


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## Seamus (Jun 21, 2018)

Yes, get a knowledgeable professional to help you. I've owned rental properties, i don't anymore as I sold them after determining it's better (and more profitable) to buy and resell rather than to try to make money on renting them.

Familiarize yourself with Schedule E which most likely will be your rental property tax reporting vehicle.


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## Seamus (Jun 21, 2018)

tohunt4me said:


> But . . . You can only go back 3 years to amend return tax forms
> The Go over. Can go back 10 years.
> 
> Which is why they Often wait 3 years to pull an Audit.
> ...


How? If the condo wasn't rented in past years how was it a "Rental Property"? What are you amending?


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## tohunt4me (Nov 23, 2015)

Seamus said:


> How? If the condo wasn't rented in past years how was it a "Rental Property"? What are you amending?


My beef was over stocks.
Not Rental Property.


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## Launchpad McQuack (Jan 8, 2019)

Seamus said:


> I've owned rental properties, i don't anymore as I sold them after determining it's better (and more profitable) to buy and resell rather than to try to make money on renting them.


I'm not going to tell you that you're wrong. I certainly don't claim that I do everything the best possible way, and my DIY spirit does bite me in the butt on occasion.



Seamus said:


> How? If the condo wasn't rented in past years how was it a "Rental Property"? What are you amending?


Maybe "Rental Property" is not the words that I should have used? That was my intent, but my follow through was majorly delayed. Investment Property???


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## Seamus (Jun 21, 2018)

Launchpad McQuack said:


> I'm not going to tell you that you're wrong. I certainly don't claim that I do everything the best possible way, and my DIY spirit does bite me in the butt on occasion.


Well, you are in a good position to be cash positive since you don't have a mortgage on your rental. The goal is to have your rent at least cover your cash outlays as the property increases in value. It seems as if you are in a solid position to do that. Good Luck!

Getting the right tenant means everything. Make sure you do a good background check, have a good written lease agreement and make sure you require your tenant to carry renters' insurance as that will help protect you as well.


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## Disgusted Driver (Jan 9, 2015)

If you want to do this properly and to your best advantage, you would need to consult a pro, I have questions as to how far back you could go (I'm assuming you haven't declared any of these expenses in previous years) and how you would need to amend prior year returns. On the other hand, if it's only a 50 or 75K condo it may not be worth consulting a pro. You could start from this year, as you just put it into service and claim the loss and see what if anything the IRS does.
Moving forward, it's pretty straight forward, I use Turbotax and it walks you thorough depreciation, income and expenses. Depreciation is extremely important because it allows you to defer income until you sell and then only pay long term capital gains on it


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## RoseParr (Dec 10, 2020)

It's regrettable when you have a specific plan in mind, and everything it's not going as planned. However, I am happy you finally started generating money from this property. I am sure it's disappointing thinking that all these 5 years, you could've developed cash, but instead, it was just a waste of money. If you need any advice regarding this domain, I suggest you look at 1031 Exchange Info|Complete Insights To Property Investing. They helped me several times with my properties, especially when it came to paying taxes, so I am sure they are a great option to consider.


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