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Started By
Message
First year rental property taxes
Posted on 1/12/15 at 10:08 am
Posted on 1/12/15 at 10:08 am
I've always done our taxes with turbotax...no problems. We started renting our former house out July 1, so i get that I get to claim the first 6 months worth of mortgage interest etc. on that property as personal deduction...biggest question is-
I get asked about how much we took in in rental payments, but never about how much we paid in mortgage payments. Its like it considers the 6K as profit, when in reality we weren't cash flowing nearly that much. Is this offset by the depreciation that we can now take, or am I missing where I am supposed to enter this?
Also, would you recommend letting a pro handle our taxes now?
I get asked about how much we took in in rental payments, but never about how much we paid in mortgage payments. Its like it considers the 6K as profit, when in reality we weren't cash flowing nearly that much. Is this offset by the depreciation that we can now take, or am I missing where I am supposed to enter this?
Also, would you recommend letting a pro handle our taxes now?
6
Posted on 1/12/15 at 10:18 am to AUjim
quote:
would you recommend letting a pro handle our taxes now?
I would if I were you.
Posted on 1/12/15 at 10:30 am to AUjim
As soon as taxes start getting complicated, I would always recommend a CPA.
Not that I would know anything about this, but penalties and interest add up quickly.
Not that I would know anything about this, but penalties and interest add up quickly.
Posted on 1/12/15 at 10:34 am to AUjim
The software is going to have to produce Schedule E Income or Loss from Rental Real Estate and Royalties. Sounds like you haven't checked the block that will trigger that. Call TurboTax and ask or use the Help function.
Posted on 1/12/15 at 10:35 am to AUjim
quote:
would you recommend letting a pro handle our taxes now?
Yes.
Anything involving more than a 1040 and Schedule A(itemized deductions) shouldn't be done on Turbo Tax.
Posted on 1/12/15 at 10:51 am to AUjim
Your property "converted" from personal to rental use on July 1. Starting July 1, you can deduct from your rental income, any expenses attributable to the property. This can include interest on the mortgage payments, any any commissions, repairs and maintenance, listing fees, insurance, etc.
I would also put half of the property taxes as a rental deduction, and half as an itemized deduction.
You also need to set up depreciation. You start depreciation at the time the property "was placed into service" which in your case is July 1.
I'm not familiar with the detail screens of turbotax to tell you where to put it. You may need a more expensive version of turbotax to handle Schedule E rentals.
As far as a pro, it might not be a bad idea, since it is your first year of a rental. They can make sure it gets set up correctly.
I would also put half of the property taxes as a rental deduction, and half as an itemized deduction.
You also need to set up depreciation. You start depreciation at the time the property "was placed into service" which in your case is July 1.
I'm not familiar with the detail screens of turbotax to tell you where to put it. You may need a more expensive version of turbotax to handle Schedule E rentals.
As far as a pro, it might not be a bad idea, since it is your first year of a rental. They can make sure it gets set up correctly.
Posted on 1/12/15 at 11:27 am to LSUFanHouston
quote:
any expenses attributable to the property
Thats the biggest question. Is the mortgage payment considered an expense?
FWIW I do think I'm going to let a pro handle it, at least this year.
Posted on 1/12/15 at 11:52 am to AUjim
quote:
Is the mortgage payment considered an expense?
Here is what is deductible:
The mortgage interest
If you escrow, the amounts your mortgage company paid out of your escrow for property taxes and insurance
You should get a 1098 form shortly from your mortgage company that will break down these totals for the year. You then need to allocate those (for 2014 only) between personal and rental.
To be clear... the entire mortgage payment is not deductible... but the parts that are not attributable to principal are.
Posted on 1/12/15 at 11:59 am to AUjim
quote:
Also, would you recommend letting a pro handle our taxes now?
Yes. You may be able to follow the rules with a Turbo Tax type of software, but at that point it's too late to properly structure. Hire a CPA not to just prepare your taxes, hire a CPA to call before you make any material financial decision. They can help during and prior to the beginning of a tax year to lower your liability.
Posted on 1/12/15 at 8:55 pm to AUjim
Also different items in the house depreciate differently.
For example the HVAC system is on a 7 year depreciation schedule while the house itself is on a 27 year (I think).
Once I started seeing stuff like that I decided to hire the acct so I didn't screw it up.
For example the HVAC system is on a 7 year depreciation schedule while the house itself is on a 27 year (I think).
Once I started seeing stuff like that I decided to hire the acct so I didn't screw it up.
Posted on 1/13/15 at 9:26 am to eng08
quote:Wrong. The HVAC system is a permanent part of the building, and it gets depreciated the same as the building. Stuff like carpeting or appliances can be depreciated over shorter periods, but central heating and air conditioning cannot.
For example the HVAC system is on a 7 year depreciation schedule while the house itself is on a 27 year (I think).
Posted on 1/14/15 at 6:45 am to Poodlebrain
i don't come here often, and now i remember why. people really do just make shite up (not you). fine on the OT. I little scary when it comes to finances.
to OP, you might not have a high enough version of turbotax. i use whatever the top one is called + a pure business version.
i'd say a rule of thumb is if you don't know the basics of tax law and aren't savvy with TT then hire an accountant.
to OP, you might not have a high enough version of turbotax. i use whatever the top one is called + a pure business version.
i'd say a rule of thumb is if you don't know the basics of tax law and aren't savvy with TT then hire an accountant.
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