Real Estate Investors/Taxes/Audit Triggers

Hello to everyone reading this post. This question is geared towards the tax professionals in the forum. I will appreciate a respone. Is it wiser for the real estate investor to chose the standard deduction or the itemized deduction? Which method is more likely to be an audit trigger? In this case, I am referring to electing single-filing status with no children. Thanks for any info provided.

makes no difference

your likelihood of being audited has more to do with how your business compares with national averages. you just want to be in the middle of the bell curve; revenues and expenses similar or proportionate to 80% of the other real estate businesses the IRS looks at. no single thing will put you outside of it.

Mark is the professional, I am an amateur.

My response is that you should use the method that gives you the least tax liability. If the standard deduction amount is greater than your allowed itemized deductions, then use the standard deduction. On the other hand, if your allowed itemized deductions are greater than your standard deduction, then you would be wasting an opportunity to minimize your tax bill if you don’t itemize.

Thanks for the responses McWagner and Dave T.

We should clarify one point. If you are electing single filing status as a married person (married filing single), then you must itemize if your spouse elects to itemize – even if doing so is not to your best advantage.

THanks for the information Dave T.