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Old 03-28-2018, 12:35 AM
 
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Since we are taxed on our income from rental properties, how does one usually prepare for this? Let's say if the tenant is paying $1200/month how much of that would be taxed and how does one budget for that? Do other tax advantages make up for it?
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Old 03-28-2018, 12:58 AM
 
Location: Georgia, USA
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You need to talk to an accountant. Today.
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Old 03-28-2018, 02:11 AM
 
Location: Phoenix-Valley of the Sun
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talk to an accountant. You'll get into deprecation where the cost basis can be tricky.
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Old 03-28-2018, 02:29 AM
 
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Quote:
Originally Posted by centerpointcaugiay View Post
Since we are taxed on our income from rental properties, how does one usually prepare for this? Let's say if the tenant is paying $1200/month how much of that would be taxed and how does one budget for that? Do other tax advantages make up for it?
like everyone said ,there are other factors .

generally your expenses and depreciation are subtracted out and the rest added to all your other income . the tricky part is separating expenses vs items that have to bet added to cost basis vs items that follow a depreciation schedule .

we have an accountant that handles our business end for our LLC and reports it on a k-1 which i just add to our personal taxes which i do with turbo tax.
as far as budgeting , we pay estimated tax . i send it in 2x a year .
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Old 03-28-2018, 09:06 AM
 
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If you have a loan securing the property, then it is unlikely that you'll have taxable income for at least a decade, maybe more.

You start with your gross income from the property (monthly rent x 12), then subtract mortgage interest, property taxes, HOA/condo fees, insurance costs, incidental expenses, broker fees for securing a tenant (if any), management fees (if any), and then the big one- depreciation.

Incidental expenses include everything from landscaping to repairs and even includes mileage for when you have to drive to and from the property for management purposes.

If you're just a casual landlord, I wouldn't worry about the tax cost as it's highly unlikely that you'll have much, if any. It adds a bit of complexity to your tax return but all tax return software products handle it easily. Note that you will not get any benefit from the losses against your ordinary income, but you can carry forward the losses indefinitely in case you should ever start showing income from the property.
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Old 03-28-2018, 09:10 AM
 
Location: Rochester, WA
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Yes, get some tax advice. You can likely deduct from that your expenses for owning and maintaining the property as described above.
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Old 03-28-2018, 02:51 PM
 
Location: Salem, OR
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Quote:
Originally Posted by centerpointcaugiay View Post
Since we are taxed on our income from rental properties, how does one usually prepare for this? Let's say if the tenant is paying $1200/month how much of that would be taxed and how does one budget for that? Do other tax advantages make up for it?
It's complicated. There are repairs, capital improvements, etc that go into running a rental property business. Some you can deduct off that amount and some get deducted over time. This isn't something you can get advice online as there are too many moving parts.
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