April 15th may seem far away and you can wait to organize the information you need for your income tax return. This may be true. In fact, you may even file an extension, which would mean you have even more time before you have to worry about this annoying detail.
Right now, you are probably thinking – why bother with this chore during the busy holiday season? You may or may not need to stop and think about this now but you should consider the reasons why it could possibly benefit your bottom line by taking action now.
The longer you wait, the higher the probability is that you could miss valuable deductions.
The current year is fresh in your mind right now because it is not quite over.
- 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?
There are items that can be easy to miss because you wait until the last minute to collect them. As time marches on, it is more difficult to remember the little things or retrieve written proof of legitimate expenditures.
Are you taking advantage of all possible deductions?
Consider talking with your tax consultant right away and seeking their advice on whether you need to improve your investment’s bottom line. You may be able to make changes before the end of the year.
Identify which are normal repairs versus those which are property improvements.
The difference can alter the amount of deductions you can take for this 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. The fall/winter seasons can be a great time to order work because many contractors are not as busy and will offer you a better price.
Increase your deductions and improve tenant relations at the same time.
You can offer a holiday gift such as a free turkey, a gift basket, a gym membership, a cable subscription, a new appliance, etc. While you are making your residents happy, you are generating legitimate tax deductions. The last quarter is a great time to make these goodwill expenditures.
Take time to review your current year’s information and document important miscellaneous items or ask for missing receipts before it is too late. Then consider what you may want to do before the end of the year.
People are busy and sometimes scheduling large maintenance is not a reasonable expectation during the very last part of the year. If you decide to take advantage of last quarter deductions, it is 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.