Landlord? Don’t Overlook This Important Tax Info

Many Americans own rental property. Whether you inherited a home, decided to downsize or upsize your personal residence, or just came across a great investment opportunity, people get into the landlord game for many different reasons and via many different avenues. Regardless of which category you fall into, all landlords must be sure to keep detailed records of income and expenses related to the property for tax time.

Deductions
If you are making money from the rental of a property that you own, then you must report the rental income on your tax return. Owning a rental property also means that certain expenses become deductible – thereby reducing the total amount of rental income that’s subject to tax.

Deductions vs. Depreciation

Deductions are very straight forward – these are the costs of operating, repairing, some improvements, and managing your rental property. These expenses should be tracked by the landlord (or his/her employee) and included, along with rental income, on Schedule E of the tax return. Depreciation, on the other hand, is not as straight forward. Generally, the basis or cost of the building (but not the land) is depreciated using straight-line depreciation which is done over 27.5 years. An equal amount of the building’s basis is deducted each year on the tax return. Any additions or improvements costing more than $2500 are also depreciated but are done so separately from the building. Additions or improvements costing less than $2500 can be deducted fully in the year of purchase.

Depreciation must be carefully tracked for tax purposes. Once the property is fully depreciated, no additional depreciation can be taken. Additionally, when a rental property is sold, the depreciation must be recaptured if the sale price of a rental property exceeds the adjusted basis (i.e. the owner’s initial investment plus the cost of certain improvements during ownership). Recaptured depreciation is reported as ordinary income for tax purposes.

Reporting Income and Expenses
At Levesque & Associates, we recommend clients track income and expenses either through bookkeeping software such as QuickBooks (appropriate if you own multiple investment properties) or through a simple excel sheet. You can also easily make use of apps such as Expensify to maintain and categorize receipts. Even though you are tracking the information, be sure to keep receipts with your personal records for at least 7 years.

Management Companies
Some property owners utilize a management company for collections of rent payments as well as property maintenance and other expenses. Typically, these management companies provide a 1099 in January of each year which summarizes the income earned by the owner. If you utilize a management company, we STRONGLY encourage you to keep your own records and compare the information you receive from the management company with what you have on file. Mistakes do happen and property owners should take responsibility for ensuring the accuracy of the of the information reported to the IRS.

Record Keeping
Good record keeping will not only help you determine the profitability of your rental property, but it will help make the preparation of your tax return much easier. Maintain records of everything related to the property. This includes keeping detailed receipts for any expenses such as repairs and improvements. You should also keep detailed records of all rental income received. Should you be selected for an audit, you will need to provide these records to the auditor. If you are audited and cannot provide proof of the expenses and income reported on your return, you may be subject to additional taxes and penalties.

 

 

Do you own a rental property? Make sure you are keeping records of the following items and providing to your tax professional at tax time:

  • All loan and interest payments
  • Repair receipts
  • Personal property costs (such as new appliances or lawn equipment)
  • Driving – if you have to drive to your rental property for any reason, you can either deduct actual auto expenses (gas, upkeep, repairs, etc) or mileage (learn more about mileage write-offs here).
  • Overnight travel, including airfare, hotel costs, meals, and other expenses, can be deducted if they are directly related to your rental property. Be sure to keep detailed records as the IRS is known to scrutinize these kinds of deductions.
  • Home office expenses, provided the landlord meets certain minimum requirements. This includes a percentage of the cost of home expenses including utilities, insurance, and more. Your tax professional will require total square footage of your home, square footage of dedicated office space, and a total of home costs
  • Do you pay an employee or independent contractor for help with your rental? Their pay is a rental business expense.
  • Any insurance you carry related to rental activity should be kept and provided at tax time.
  • Fees associated with legal and professional services such as an attorney, accountant, management company, etc.

Looking for more information? Get in touch with Levesque & Associates by phone or email.

Local Business Spotlight: Revolution Chiropractic

We’re so excited about our first Local Business Spotlight of 2019!  We are featuring our dear friends at Revolution Chiropractic in Marietta, GA.  Keep reading to learn about the challenges they’ve faced growing a successful practice in the same town as one of the largest chiropractic schools in the country (lots of competition!) and the lessons they’ve learned along the way.

Q: What is the name of your business and when did you get started? 

Revolution Chiropractic was officially founded in January of 2016.

Q: Tell us about your business.  What products and/or services do you offer? 

We specialize in performance chiropractic care for the whole family.  We offer custom chiropractic care plans for the health of your spine and nervous system, to keep you moving well and enjoying your favorite activities.  Everyone who comes to see us begins care with a digital nerve scan, biomechanic and functional movement assessment, and posture screening. Based on our findings and your health goals, we put together a custom health plan just for you!

Whether you are in pain, injured or just looking to improve your health; we offer spine and extremity adjustments (knees, hips, shoulders, etc.), pediatric adjustments, prenatal and postpartum care, and medical grade supplementation and nutrition.  We also offer advanced soft tissue techniques and therapies including graston, cupping, laser, massage, myofascial release, and prenatal massage.

Our community events at the office are great too! Workshops on core health, essential oils, immune boosting, breath and flow classes, and weekly healthy meal-prep swaps.

Q: How did you get the idea or concept for the business? 

Revolution Chiropractic started when Dr. Kristin Steele and Dr. Shannon Good met in Chiropractic School, and graduated in 2011. Dr. Steele worked for Life University Rugby while completing  her Masters Degree in Sports Health Science, when she met Dr. Kristopher Headlee (former Life U Rugby Captain). Fast forward a several years and after seeing a need for a chiropractic office that incorporates family and performance care, these three friends decided to help families with their own health revolutions.

Q: Why did you choose your industry/business? 

The three doctors of Revolution all have an innate drive toward better health and performance. It has served them well as athletes themselves. That same drive fuels their desire to take care of people and help others strive for better health. Dr. Kris Headlee’s personal experience with chiropractic care that allowed him to continue playing Rugby at an international level is part of what makes him an amazing sports chiropractor.  Dr. Shannon Good, although being a former elite gymnast and coach, has always taken care of kids and now is one of 5 certified Pediatric Specialists in the state of Georgia. Dr. Kristin Steele is also a former collegiate swimmer and specializes in taking care of pregnant moms and helping them stay active and healthy.

Q: What was your mission at the outset? 

We say that “Your family’s Health Revolution starts here” and that’s been our mission since we started. People deserve custom care that is unique to their body and their health goals, regardless of their age.  We are committed to helping people perform, move, function and recover, better, faster, stronger, longer!

Q: Which channel(s) do you feel has been the most beneficial to the growth of your business (Social media, web-presence, word-of-mouth, networking, etc)?  Why?

Our business has really grown because of our reputation to take such good care of people. Word-of-mouth, networking, community partnerships with local gyms, and building an online community through Instagram and Facebook for our patients – those have all served us well. For us, it always comes down to relationship building. If a marketing channel includes that, then it has helped and will continue to help our business grow.

Q: What do you feel has been the biggest contributor to the success of your business? 

We are certainly not a conventional chiropractic office! You’d be hard pressed to find three specialists under one roof that have the ability to take care of the whole family like we do. Our attention to detail from the start and custom care you receive in our office really separates us from traditional chiropractors. When you become a patient in our office, you become family, and we take care of you like family.

Q: Can you tell us about a client experience that made you think, “This is why I do what I do!”?

We offer family care plans at our office, and it’s not uncommon that they just start with one person. After that one person comes in, then they bring their spouse, and then kids, and then their parents…. Our largest family care plan is a 10 person care plan! Multi-generational, everyone coming in for different reasons, but still using chiropractic care on a regular basis to stay moving and healthy – that’s why we do what we do!

Q: Do you have a favorite quote, book, or blog that has inspired you as you have grown your business? 

That’s a tough one, because we are always soaking up all the business and personal growth knowledge we can. Right after we started Revolution, all 3 of us attended the Tony Robbins UPL conference and that was definitely a launching point for us.

Q: What was the most valuable lesson you learned in your first year (or first few years) of business? 

It’s very easy to get mired down in administrative work that is not time sensitive nor an income producing activity.  You need to set boundaries in your schedule for prime-time activities (working to generate revenue), prep time activities (administrative, management, and training time), and also play time (personal and family time).  The difficult part is to stick to the schedule that you set for yourself. If you don’t respect your own boundaries, your prep time activities will very easily begin to take away large chunks of time from prime time and/or play time.  Your time is your most valuable resource – don’t steal it from yourself, and don’t let others steal it from you. It’s the one thing that once it’s lost, can never be replaced.

Q: What has been the biggest obstacle you have faced while starting and growing your business? 

Differentiating ourselves, and then effectively marketing that fact, in a very competitive market. If you aren’t familiar with Marietta, it is home to the largest chiropractic schools in the country. There’s almost one chiropractor on every corner!

Q: What words of wisdom or advice would you offer to someone starting their own business? 

A couple things:

You may have the greatest product or service in the world, but it won’t matter if nobody knows who you are, how to find you, and how what you have to offer will benefit them.  Don’t underestimate how important marketing is to a new business. I can’t emphasize that last sentence enough.

Next, there’s going to be a lot of people trying to sell you stuff that you don’t need right away – in your early weeks and months, always ask yourself if any new product or service is a need or a want; is it critical to the operation of your business?  Controlling your overhead is critical, especially early on. Don’t take on debt to get started and don’t sign up for monthly services that aren’t necessary to run your business.

Revolution Chiropractic
60 Whitlock Place, Suite A
Marietta, GA 30064
678-956-1598

Local Business Spotlight: The Weikum Group

It’s time for our next Local Business Spotlight and this time we are excited to be featuring our friend Ken Weikum of The Weikum Group.  Ken has worked in the insurance industry for more than a decade and used his many years of experience to build a business that makes insurance simple and accessible for his clients.  Keep reading to learn about his experience starting and growing his business.  ​

Q: What is the name of your business and when did you get started?

My name is Kenneth Weikum and I am the principal agent of The Weikum Group.  Before opening the agency, I spent 10 years handling claims from auto adjusting, subrogation, and catastrophic property adjustment.  I volunteered to go in after catastrophes, to deal with the tears, to face their fears with them, and to deliver on the promise that they have been paying into.  Yet, as an adjuster, you can only do so much, and it only comes to pass if the worst happens. 

Therefore, I opened The Weikum Group to be in the business of helping people.  As an Agent, I can insure that each one of my clients has the right policy and is matched with the right company.  That way my clients do not have to worry if the policy they bought online is going to cover them or not.

Q: Tell us about your business. What products and/or services do you offer?

The Weikum Group is an Independent Insurance Agency with a laser focus to “Make Insurance Simple” and to place the “right customer with the right company.”  We have appointments with a wide range of insurance carriers, giving us the options to accomplish just that. We can offer our customers coverage for auto, home, life, umbrella, and business insurance.

 

Q: How did you get the idea or concept for the business?

Insurance is not a tangible product and what it covers is often a mystery to most people.  Most Insurance companies are not advertising how their product is different, just that is better than their competitors and its cheap.  With so much mystery behind a product, having an agent is almost a no-brainer.  Then the question is, do you want an advisor who can only advise you with one solution, or with a toolbox of solutions?

I wanted to create an agency where my clients knew what products they were purchasing, what their policy covers, and to know that their policy was tailored to their needs.

Q: Why did you choose your industry/business?

This one is always a funny one.  Nobody goes to school to become an Insurance Agent.  Like many in my field, we fell into it and fell in love with it.  We would spend weeks out in the field, but we were changing people’s lives!

Q: What was your mission at the outset?

Our motto has always been to “To make Insurance Simple.”  Insurance policies are contracts and read like them too; similar to those terms and service agreements that everyone agrees to but has no idea what they mean.

Imagine having the option to call someone each time you came across a terms and service, and we gave you the abbreviated version and could educate you on what you were agreeing to.  That is what having an Agent is all about!  Just like you have an accountant, CPA, or lawyer to advise you, insurance agents can be your partner to build coverages that are right for you.

Q: Which channel(s) do you feel has been the most beneficial to the growth of your business (Social media, web-presence, word-of-mouth, networking, etc)? Why?

I fundamentally believe that people like to do business with those whom they know and trust.  In fact, trust is half the equation when it comes to services like The Weikum Group, Levesque and Associates, or Active Financial.  That is why we do not cold call or buy lists.  We aim to make valuable relationships with other professionals, meet the customer when and how they want to purchase insurance, and then follow up with yearly reviews to make sure we are upholding our end of the bargain.

Q: What do you feel has been the biggest contributor to the success of your business?

I firmly believe that the only real currency in the world is relationships.  I would not be where I am at today if it was not due to the generosity, mentorship, or contribution of hundreds of people.

We are in the same building as Levesque and Associates, and it wasn’t on accident!  I had known Conrad for years, and it was happen stance that he reached out and wanted to help.  During coffee we found out that we had a very similar dream and decided to team up add even more value to our clients.

Q: Can you tell us about a client experience that made you think, “This is why I do what I do!”?

I am blessed to be able to have that feeling almost every day!  About 80% of our clients walk away better covered and spending less money for that policy.  That is a real impact on peoples lives!  Even if we can price match and add coverage, once people understand what they are being protected against, it is a no-brainer.

Q: Do you have a favorite quote, book, or blog that has inspired you as you have grown your business?

“How you do anything…Is how you do EVERYTHING…”

It means that the little details matter.  It means who we are after 9-5 will reflect who we are during 9-5.

Q: What has been the biggest obstacle you have faced while starting and growing your business?

I often remember being resentful when management would take action and it wouldn’t make sense to my role.  I would often talk about ways I would do it better or how that idea was silly.  Now that I am a business owner…everything I do or don’t do comes down to me.  Yet, what is equally gratifying, and terrifying are those moments when it all comes together!

Q: What words of wisdom or advice would you offer to someone starting their own business?

Surround yourself with good people who want to see you succeed.  Know WHY you are doing what you are doing.  Take the leap and keep flapping!

Starting a business is tough as nails and nobody is going to do it for you, yet if you know why you are doing it, surround yourself with good people, and work your tail off, only good things will come!

Contact:
Ken Weikum
The Weikum Group
678-665-0508
ken@theweikumgroup.com