Now that we are in the early weeks of a new year, that means that it is tax season. Whether you are a homeowner or real estate investor, make sure that your property taxes have been paid. If your mortgage lender pays the property taxes out of an esgrow account, it is ultimately the responsibility to see that your property taxes are paid.
This is also the time of year to begin preparing for filing of your income tax returns. While I am not a tax professional, I am the spouse of a woman who has been a tax professional for over 30 years. Real estate professionals: this is the time of year when you need to prepare W-2 forms or 1099 forms for any employees or contract workers you may have. While you may not have the know-how on how to do that, it is your responsibility to see that it is done.
Whether you are a homeowner or a real estate investor, begin organizing your financing information as filing of your federal and state taxes draw near. Here are a few things that it would be wise to be sure you have for your tax preparer:
- Income and expenses for any rental properties you may have
- Information about properties you may have sold during the year including a copy of the HUD 1 when sold… HUD 1 when acquired… list of improvements and cost for the improvements since you had the property
- List of expenses and cost for your real estate business (e.g. office costs, phone, software, etc.)
- Mileage log if you use your personal vehicle in your real estate business including date, purpose, mileage to begin, mileage when you ended
This can take quite a bit of time if you have to do this by hand. I use an excel spreadsheet and financial software to assist me in keeping up with my expenses. This is a good time to begin using new resources in 2013 to more easier keep up with your expenses.
A word to the wise whether you are a homeowner or real estate professional: have documentation of any deduction you claim on your taxes. You may have spent it, but you need to prove it in case you are ever audited by the IRS. Thanks.- Randy Wall, Lora Lee properties