I just purchased a rental property for $63,000 and put in $5000 worth of expenses. This is my first year, offering until income and wondering what are some of the best tax deduction strategies that you guys use to lower net income on paper?

also, if I am taking cash from the tenant as a rental income, how do I prove that what my rental income is?

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Where can you buy rental properties for $63k?And how much rent can you get?

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Just as a word of caution… from working in credit… don’t show absorbent losses on your business returns. I’ve had clients apply for HELOCs or CELOCs, which all need a personal guarantee, where their earnings were $300k+, but all of their real estate holdings were showing losses, to mitigate taxes, and when the dust settled their gross income looked more like $145k, and their DTI, was sky high, making them un-lendable…

We have several properties, and I show, and write down, just enough to breakeven so it doesn’t impact my ability to borrow.

It’s a trap I’ve seen time and time again…

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Absorbent losses are bad news!

I suggest a separate bank account and business credit card for tracking income/expenses. I also check on what repairs can be expensed vs depreciated.

Cost seg analysis to increase the depreciable basis

That isn’t very helpful if the OP isn’t claiming REPS

You should talk to an accountant who specializes in investor owner real estate… or at least pay for a consultation to learn all the tricks this year and implement the strategies in the future

There's a lot of noise in the responses you're getting here.

It's simple - make sure you depreciate the property, keep track of income and expenses. Have signed lease agreement for legal purposes. No need to "prove" income unless you're audited. Just keep records is all.

Your $5k in additional investment - do as you please - either expense in year 1 or depreciate over a period of time. None of this will trigger an armed agent knocking on your door.

You can also lookup rules for mileage and home office if those would be applicable to you.

Lease agreements are a must! But not to prove income.

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