Taxes recommendation - first time landlord

Hello, I recently bought a 2 family home in park slope and am looking for a recommendation for a tax accountant. Can anyone recommend someone in Brooklyn who has helped them especially when it comes to specialty in dealing with 2-family property owners with tenants and tenant property expenses and investments?

sjq2102

in General Discussion 7 years and 11 months ago

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slopefarm | 7 years and 10 months ago

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Exactly – mortgage interest, insurance, amortize reno expenses, offset repairs and maintenance, etc. Lots of items reduce the net income on the rental. You don;lt need to incorporate to do this, just schedule it properly.

shahnandersen

in General Discussion 7 years and 10 months ago

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In addition, unless you have paid off your mortgage and have fully depreciated your tenant’s apartment, it is unlikely that you would have significant taxable income from your rental..

slopefarm | 7 years and 10 months ago

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sj – I have had several professionals I use for various things (plumbers, handyman, etc) tell me they do not want to be referred on line and only want referrals of potential customers that their customers know. (Vendors are different, more arms-length, so I have posted good and bad about vendors.) That said, a decent accountant can do what I described above.

work — I second what lurker said. AN LLC shields you from liability (but the form can be pierced under some circumstances.) But you don’t need an LLC. You need good accounting to offset the income with losses. If the LLC is just you, what diff does it make whether you or the LLC pays the taxes on the rental income.

Lurker | 7 years and 10 months ago

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workisfun, to clarify, i believe you’d create an LLC (or probably an S corp) which would be your real estate business. I think creating an LLC to actually own the home after the purchase is onerous cost-wise. The advantage of having an S corp or LLC as the business is that it creates a barrier between your personal finances and those of the business. So you aren’t personally liable should u ever be sued. Unless I’m mistaken you still get taxed as income however it’s a pass-through tax, meaning you only get taxed once (you don’t pay a business tax and then again personal tax on it) hwoever there may be other advantages too–self employment tax, deductions etc

workisfun | 7 years and 10 months ago

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I was recently advised that if I create an LLC for my 2-family house (I live there and rent out the 2nd unit), then my rental income would not be taxed as income, as it is now. Thoughts on this?

sjq2102 | 7 years and 10 months ago

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Hi Slopefarm, that is very helpful, May I ask which accountant you use? It seems like it’s exactly what I ned, just someone to help me know what is allowed and help make sure I’m getting best tax treatment without doing anything illegal or triggering an audit. Thanks!

slopefarm | 7 years and 11 months ago

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A little mojo is helpful, as you may not be aware of all the costs you can offset against rental income. For example, you can treat a proportional amount of homeowner’s insurance, mortgage interest, certain building repairs, etc. as expenses. If you renovated the rental, you use some of those expenditures as well on a amortization schedule to offset rental income. Useful to have an accountant set the percentage attributable to rental and to vet your expenditures. If you are comfortable doing all this yourself and know the contours of what is allowed and what won;t trigger an audit, go for DIY. I prefer having an accountant to help me maximize the tax savings and minimize the audit risk.

sjq2102 | 7 years and 11 months ago

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Great many thanks!

shahnandersen

in General Discussion 7 years and 11 months ago

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Do you do your own taxes? If so, do you use tax software like TurboTax or H&R Block. These products will work for you in a two family home. Or if you use a tax preparer, s/he will have no trouble filling out Schedule E if you have the records. No need for a separate accountant.

evg25 | 7 years and 11 months ago

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No out of the ordinary is required. Just keep a record of income and expenses-categorized as best as you can. These will be entered on a Schedule E filed with your 1040. I have all my clients do this. No mojo required; just record keeping. Best of success!

rwood | 7 years and 11 months ago

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Coscia and amsterdam. My inlays and we use them for a few decades now. http://cosciaandamsterdam.com