Real Estate Investor Tax Document Checklist—Never Miss Another Deduction
Summary
This article provides a checklist for real estate investors to ensure they're maximizing tax deductions. It highlights key forms like 1099s and discusses changes to bonus depreciation and the SALT cap. Hosts should review their records and understand eligible deductions to minimize their tax burden.
Key Insights
- •The average real estate investor leaves $8,200+ in deductions on the table every year.
- •100% bonus depreciation is back for assets placed in service after Jan. 19, 2025.
- •The SALT cap will rise to $40K for married couples from 2025 until at least 2029.
- •The IRS audit chance is pretty low, around 0.4%, but discrepancies in reported income, overly large or unusual expenses, and incorrectly filed forms can put you at a much higher risk.
Action Items
- ✓File 1099-NEC forms for contractors if payments were over $600 (increasing to $2,000 in 2026), to qualify for the pass-through business deduction.Effort: lowImpact: medium
- ✓Be aware of different 1099-K thresholds for payment apps (restored to $20K in 2025) and card processors (regardless of amount) and ensure accurate reporting.Effort: lowImpact: medium
- ✓Be scrupulous with recordkeeping for vacation rentals and be prepared to prove how the home was held for.Effort: mediumImpact: medium
- ✓Consider conducting a cost segregation study to maximize deductions with bonus depreciation, potentially writing off significant costs right away.Effort: mediumImpact: high
- ✓Review all 1099 forms to ensure all income is accounted for, ensuring it is not smaller than what's on the forms to avoid IRS scrutiny.Effort: lowImpact: medium
Tools & Resources
- →Baselane: Baselane is mentioned as a banking platform created especially with real estate investors in mind, helping with bookkeeping.
Watch Out For
- ⚠Reporting rental income on the Schedule C form when it must be reported on Schedule E.
- ⚠Failing to file 1099-NEC forms, there are penalties for nonfiling.
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