How to do your Investment Property Taxes

Are you looking to create generational wealth? Investing in property is one the best ways to build wealth and diversify your portfolio. This article will help you to manage the taxes related to your investment property.

Instructions

Difficulty: Moderately Easy

Things You’ll Need:

• Spreadsheet
• Calculator
• File folders

1. Determine whether or not investing in property is good for you at this time. You should know your tax bracket and determine with the guidance of a tax professional whether or not this would be a lucrative investment and a valuable part of your investment portfolio.
2. View a Schedule E and related publication to see what is classified as: income, deductions, depreciated items, or a loss.
3. Keep good records. You should save all documents related to your property, ranging from: the original purchase agreement to paying the neighborhood kids to shovel snow. Organize these records in a file folder for each category: Advertising, Auto and travel, Cleaning and maintenance,Commissions, Insurance, Legal and other professional fees, Management Fees, Mortgage interest paid to banks, Other interest, Repairs,Supplies, Taxes, Utilities, and Other/Miscellaneous.
4. Monthly add your receipts into an Excel Spreadsheet. Organize the sheet with the above mentioned categories as headings. Under each heading, list the item or service purchased, date, amount, and method of payment. When tax season arrives, you will be prepared to bring this information to your accountant or prepare your taxes yourself. This will save you time and energy during tax season.

Tips & Warnings

• Seek additional advice from your tax advisor, accountant or attorney.
• View tax updates on the Internal Revenue website.