Question: How do I use the per diem option for travel expenses? Answer: Per diem is a standard allowance permissible in lieu of actual expenses. There are no receipts required. The owner of a business is not allowed to use per diem for travel and lodging. However, business owners are allowed to use per diem
Question: Should I rent my home office to my business or take a deduction? Answer: In order to determine which choice is best for you, either taking the home office deduction or renting your home office to your company, you will first want to review your entity structure and determine which business entity will use
Question: How do I handle expenses used by more than one of my businesses? Answer: The expenses should be allocated to the business (or investing) activty. The two keys here are to be reasonable and consistent. Reasonable means that the method you use to determine how much of each expense should be allocated is fair.
Question: What are the differences of being considered a "Dealer" vs. an "Investor" and why does it matter for tax purposes? Answer: There are two primary tax differences of being considered a dealer of real estate. First, the gain on the sale of the real estate is taxed as ordinary income if you are a
Question: When can I start deducting business expenses? Answer: There must be a business activity in order to deduct business expenses – whether that business activity is in an entity or not does not impact the deduction. The significance for tax purposes as to whether your business has started yet or not is that you
Question: Are all rehab costs considered capital improvements? Answer: Rehabbing a property may consist of capital improvements as well as repairs. It’s important to distinguish improvements from repairs in your accounting as the tax treatment is very different. Repairs are deducted immediately. Improvements must be capitalized and are deducted (depreciated) over a number of years
Question: Should my entity own my vehicle? Answer: Rule of thumb here for tax purposes is if the vehicle is used more than 50% of the time for entity business, then your entity should own it. Otherwise, you should own it. If you own it, you should pay all the expenses and have your entity
Question: How do I pay expenses before my entity has a bank account? Answer: You’ll need to pay for your expenses personally since your entity doesn’t have a way to pay for them yet. You’ll want to make sure your entity has a written policy that provides for reimbursement of these expenses – just as
Question: Which of my activities should claim my home office? Answer: An activity in this case may be a business activity or an investment activity that may or may not be in an entity. The home office deduction is based on use so which activity claims it and how much it claims is based on
My husband works for an employer and I am taking on the real estate investing with his help. I do not earn an income from any source.