You might be wondering how to audit-proof your time spent on rental properties. At Advanced Tax Advisors, this is a common question we receive, and it’s no surprise as to why. The world of taxes can be incredibly confusing, especially as the rules change often. Most individuals aren’t trained in the tax field, and therefore miss fundamental elements that can benefit them or their business for tax season. At Advanced Tax Advisors, we help our clients audit-proof their rental properties. Here are a few facts and tips if you’re audited.
In order to qualify, you must claim status as a real estate professional. This is one of the only ways to claim your rental property losses. It’s crucial to keep track of your time spent and your material contributions. On your time record for the year, you must have spent more than half of your personal time and finances in real estate properties. As far as hours go, you’ll need to spend over 750 hours.
The biggest issue is showing that you were materially involved with the property rental. Luckily, if you’re married, you can both count your combined efforts. The contributions will help you pass the material participation test. According to the IRS, there needs to be significant documentation to show that you were, in fact, very much a part of the rental property. They may require daily time reports and logs as part of the paperwork.
If it seems like a lot to keep track of, that’s because it is. Fortunately, our team at Advanced Tax Advisors can help you audit-proof your time spent on rental properties. With an eye for important tax information and our knowledge surrounding businesses and individual affairs, you can rest at ease. We’ll help guide you throughout the year to ensure that you’re documenting as you should be. With our assistance, tax season will go smoothly, and it will be one less thing for you to worry about. For more information on how to audit-proof your time spent on rental companies, call (954) 888-6941 today.
Learn all of this and more at the Tax Planning Strategies Webinar For Real Estate Investors, Brokers, Realtors, Landlords, Wholesalers, Rehabbers, Airbnb’ers