quote:
No. Rental real estate is a great place for deductions - you don't even know the scope of your increased tax liability yet, and we're already mid year

Thanks for the response.
I should have clarified. I will probably only have 4 months of rent by years end.

This is primarily in antipation for the next year.

quote:
Owing ~$1000 isn't the end of the world - in fact, it's ideal. You plan for that by setting it aside in an interest bearing, but liquid account (probably money market, unless you can get a nice rate on a 30-day CD - which is unlikely, short term).

Luckily I work for a local bank that offers excellent rates on both MM and short term CDs.

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Posted by Ace Midnight

Between sanity and madness

Member since Dec 2006

89745 posts

Posted on 7/30/13 at 1:52 pm to Oenophile Brah

quote:
Luckily I work for a local bank that offers excellent rates on both MM and short term CDs.

Good news is you get a preview this year.

If you come out owing a good chunk this year, maybe redo your W-4 at work to reflect a second deduction. However, are we talking about $5000 to $6000 in gross rent? Or quite a bit more.

Even 20% of $6000 is only $1200. I wouldn't sweat that unless you're in danger of penalty and interest from the IRS.

ETA: Crap - I just figured out you want LESS withheld from your paycheck...

Yeah, I would increase the deductions to 2 now - always pick what you are maximally entitled, unless there's a good reason not to (i.e., you're owing penalties and interest at the end of the year). You usually get a pass the first year you hit the penalty, unless you've pushed the envelope too far.

I want to owe as much as possible, without being in the penalty. They don't pay you any interest on your "refund" which is really just your money you let them hold all year (up to 16, 18 months).

This post was edited on 7/30/13 at 1:56 pm

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