Just closed on my first investment property on Dec. 27th (finally!). I will receive my first rent check today (Jan. 10th). Only thing I put into the house during 2010 was about $100 for new door handles and locks. Seems like everyone recommends using a CPA, but since I did not receive any rental income last year, do I need a CPA for my 2010 taxes? Thanks!
You need a tax professional to advise you regarding the tax consequences of your deals. Tax return preparation is easier for them because they already know your situation. It’s a waste to use such people only for tax preparation.
OK, thanks for the info.
If you have never done your own taxes, then by all means get professional assistance with the first one that includes your rental property. Be sure to get a copy of all the forms and worksheets that contribute to your tax return. Just in case you use another preparer next year or decide to do it yourself, you need to know what was done previously.
If you are already familiar with TurboTax for your personal tax return, then you won’t have any trouble using TurboTax to report your rental property income and assets. For your first rental property, the TurboTax guided interview should get you through just fine.
There are several versions of TurboTax depending upon the complexity of your tax return. I find that TurboTax Premier is adequate for most rental property owners who keep the property in their own name and don’t use a business entity. Additionally, if you use Quicken or Quickbooks for your accounting, you can import nearly all your income and expense items from the accounting software into TurboTax. I personally use Quicken Rental Property Manager and do my own tax returns with TurboTax Home and Business.
If you plan to incorporate your business or establish an LLC that will be taxed as a partnership, then TurboTax Business is what you need. Please note that TurboTax Business is not the same as TurboTax Home and Business.
Use the CPA for tax planning as your business grows; but, you probably won’t get much value from a CPA if all you use him/her for is tax preparation.
I’ve used turbo tax the past couple years. L ast year was my first year with a rental. I think I didn’t use the free version (for the first time), I can’t remember the form name it had me use but it walked me through it. I read a bunch of the turbotax Q and A’s. I got through it no prob. Your situation is probably pretty simple. Your door handle improvements will probably need to be depreciated because it was an improvement and before the rental was put in service.
maybe you didn’t have rent income, but you did have some important transactions. you purchased a property, maybe it had appliances or furniture, and those items need to be set up properly (split land from the house, split out appliances/furn) to take full advantage of any accelerated depreciation and prevent problems in later years.
so, do you want to spend 5 hours of your time figgerin out all that stuff, printing publications and instructions, or do you want to go looking for your next deal while I spend a couple of hours and a few hundred bucks to do it for you.
often it’s not what you “can” or"need" to do, it’s more “what’s the best use of your time.”
I “can” repair my garage door opener. Or I can do a tax return while the garage door guy does that for me… and come out ahead.
Unless you are very small, and have lots of time, get a CPA. I feel you are more open to get audited if you DON’T have a CPA. Having a CPA is the norm. Stay within the norm.
Furnishedowner
New door handles and locks are repairs that can be expensed.