We have many clients who own real estate, and not one of them is named Trump (thank goodness). The complicated tax rules that surround rental properties, both commercial and residential, are many and understanding is limited. Even tax professionals have a hard time with them, so can you imagine how confusing it is for someone who just wants to purchase a fixer-upper for $300 of monthly income?
We had a very difficult case arise with Ron and Anne, who purchased a commercial shell in a distressed area to turn it into a commercial rental property. Anne owned a business that was going to utilize half of the building, and they planned to get a renter for the other half. This tap dance went on for three years, and no one was renting anything. Anne devoted most of her time to working with contractors and real estate agents, doing anything and everything to rent that place, and she felt as though she should be able to deduct all of the expenses related to the property. We felt that it was a toss-up, and informed them of the possibility of losing the case under audit. And that’s exactly what happened.
We never like losing something under audit, but we certainly learned a lesson that we’ve been passing along to every single client after them. You can bet that we’ll share this story with our Start-Up School attendees because this lesson is a golden one.
We just sent you an email. Please click the link in the email to confirm your subscription!
OKSubscriptions powered by Strikingly