Landlords’ Tax Preparation Guidance for 2022

Tax season is almost approaching. Prepare answers to your tax relief and tax deadline queries.

What you’ll discover:

What papers do landlords need to prepare for taxes?
What are the upcoming tax deadlines for 2022 and 2023?
Is there any tax assistance available for landlords affected by COVID-19 in 2022?
Can landlords deduct losses resulting from tenant nonpayment of rent?
Is it true that incorporation makes taxes simpler for landlords?

The 2022 tax year is coming to an end, which means tax season is quickly approaching. Here, you’ll discover some answers to assist you make more smart choices now and be better prepared for submitting your tax taxes when they become due.

What documentation must landlords produce for tax purposes?

When it comes time to complete your year-end tax return, having the correct paperwork and records on hand may help to speed the process for everyone involved. As a landlord, you may prepare for tax season by obtaining the following documents:

Tax returns from previous years.
Leases for tenants.
Titles to property or deeds.
Legal papers, including as incorporation records and inspection reports.
Policies for commercial insurance.
Payment receipts for rent.
Security deposit records.
Expense documentation, such as marketing, mortgage interest, repairs, maintenance, landlord-provided utilities, service fees, office expenditures, and so on.
Whether you have workers or independent contractors, you will incur payroll costs.
Business travel costs.

What are the upcoming tax deadlines for 2022 and 2023?

The majority of the tax deadlines for 2022 have already gone. The last date to pay anticipated quarterly taxes for the fourth quarter of 2022 is January 17, 2023.

The filing date for 2022 year-end tax returns is April 18, 2023. In 2023, small company owners, including landlords, will be required to make the following quarterly anticipated tax payments:

April 18, 2023; June 15, 2023; September 15, 2023; and January 15, 2024 (for the fourth quarter of 2023).

There may be extra tax deadline issues depending on your company structure and if you have staff or independent contractors assisting with property maintenance or other responsibilities.

Is there any tax assistance available for landlords affected by COVID-19 in 2022?

The COVID-19 epidemic impacted both big and small enterprises, including independent rental property owners. Several tenants struggled to make ends meet, causing some to fall behind on their rent. This, of course, has an impact on property owners who rely on rental revenue to cover mortgage payments and other fixed costs.

Landlords who are still suffering from the pandemic’s impacts may be eligible for several government assistance programs, including small business tax credits under the American Rescue Plan Act of 2021.

Consult a tax or legal specialist to determine whether tax breaks apply to your rental property company. Knowing the different relief programs may assist you in making more strategic selections, allowing you to Lease Confidently.

Can landlords deduct losses resulting from tenant nonpayment of rent?

The answer is determined on whether you declare taxes on a cash or accrual basis. The accrual approach requires you to declare revenue and costs when they are due and allows you to deduct uncollected rent.

On a cash basis, revenue is reported upon receipt and costs are reported upon payment. As a consequence, if you are a cash basis taxpayer, the IRS says you cannot deduct uncollected rent. Other deductible expenditures connected to delayed rent payments, such as legal fees expended in attempting to recover overdue rentals, may exist.

Is it true that incorporation makes taxes simpler for landlords?

A distinct, legal corporate entity for your rental property business may assist you separate your commercial and personal revenue. In addition to personal liability protection, incorporation may provide various tax benefits.

Incorporation may reduce the possibility that your company revenues will push you into a higher tax rate. Moreover, you may be eligible for company-specific tax credits and deductions for regular and reasonable business costs that are not accessible to individual taxpayers. Tax benefits may differ based on the kind of company organization. Consult an attorney or your tax advisor to see if establishing your rental property company makes sense.

If you change your company type or incorporate in the midst of a tax year while still running your rental property business and making money, you may be required to submit two different tax returns for each time period.

Taxes might be perplexing whether you’ve been leasing property for decades or just a few months. Tax legal assistance may assist you in remaining in compliance with new IRS laws.