Tuesday, February 20, 2007

Houseblogging landlord tax nightmare

Actually, that was last year, but it's peaking its ugly head again this year and helps me reminisce about tax time last year.

Ever since we started work on this place, we have meticulously saved our receipts. 4 big envelopes, Home Depot, Lowe's, Menards, and "other". We knew one day, we would need them. Now what perchance, would make this little story a nightmare? Toss a rental into the picture. All those little expenditures could be depreciated, decreasing our rental income (and our taxes) But, we never really looked into this when we started collecting receipts-hence the nightmare.

Interspersed with all our little house projects, we routinely played the game "what does "INTLTXBS1GL" mean (newbies at the game I think that is 1 gallon interior latex paint)? And round 2 is that a rental expense, general expense, or our expense? can it be capitalized? Fun times. Home Depot is really the worse at descriptions.

After all the joy with categorizing items, 2006 we took a vow to always indicate the category when we brought home a receipt. We ended up doing that about 50% of the time. (much easier though categorizing things over the last year vs. 3 years!)

Anyway, it's not just about demo, stripping, and painting around here-there's plenty more renovation joy to be had.

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2 Comments:

Blogger StuccoHouse said...

Boy, do I feel your pain on this one. I rent a small office in my home to my company, and this puts me in the same situation as you. Collecting receipts for my taxes. Last year I got to the point where I briefly considered that maybe the tax deduction was not even worth the hassle :-)

February 20, 2007 5:01 PM  
Blogger allison said...

We also have steered away from rentals, although I think it can be a good thing for the right people. We just did not want the maintenance headaches(since we spend all our time fixing our own house), plus the tax issues. Good luck!

February 24, 2007 1:21 PM  

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