April 15thmay seem far enough away that you can wait to organize your tax information, but here’s why your bottom line might benefit from carving out some time to deal with this during the busy holiday season.
First, the longer you wait, the higher the probability is that you could miss valuable deductions. The current tax year is still fresh in your mind, so take the time to review your expenses now.
Have you been keeping your records organized? Do you have all your receipts and statements? Are there any justifiable cash deductions that you failed to document?
Some expenses are easy to miss when you wait until the last minute to rack your brain and file cabinet for them. As time marches on, it is more difficult to remember the little things or retrieve written proof of expenditures.
Are you taking advantage of all possible deductions for this year? Consider talking with your tax consultant right away to seek their advice on improving your investment’s bottom line. You may be able to make changes before the end of the year.
Don’t forget to identify which expenses are normal repairs versus those which are property improvements. The difference between the two can alter the number of deductions you can take for the current tax year. Major improvements generally require depreciation over a period of years, but normal repairs are generally 100% deductible. A knowledgeable tax professional can advise you on this.
In addition, by completing major repairs or improvements before the end of the year, you may be able to save money because many contractors are not as busy and will offer you a better price.
You can also spread some cheer and create goodwill while you increase your deductions by offering a holiday gift such as a free turkey, a gift basket, a gym membership, a cable subscription, a new appliance, etc. The last quarter is a great time to make these goodwill expenditures because you know your overall profits for the year.
Take time to review your yearly information and document important miscellaneous items or ask for missing receipts before it is too late. Then consider what you may want to dobeforethe end of the year.
Tenants are busy, so scheduling major repairs isnota reasonable expectation during the last six weeks of the year. If you decide to take advantage of last quarter deductions, it’s also important to anticipate if you can reasonably complete a project by December 31.
Consult us on your plans for any legitimate deductions. As your property management company, we can advise you if it is possible to do or even suggest an alternative solution.
We are not Accountants, so this is not tax advice or legal advice.