Take Advantage of Home Based Business Benefits and Keep More of Your Money

As an Investment Property owner, you can establish a home based business if you meet simple qualifying steps set forth by the Internal Revenue Service:

1.Work your business a minimum of 3 to 4 hours a week

Managing and administrative duties, or doing the actual maintenance on the property are all examples of working your business.  

2. Prove you’re trying to make a profit

Collecting rent checks, controlling expenses, advertising when there are vacancies, etc.

3. Always keep good business records

For example, have a separate checking account for each property (do not co-mingle funds with personal accounts), record all expenses, vehicle mileage, etc, related to the management of the property, and keep information current and up to date.

The IRS makes it very advantageous for tax payers to operate a home based business of any kind. Once the simple qualifying steps discussed above are met, following the IRS guidelines in Publication 587, should be relatively easy. Download IRS Publication 587 directly from the IRS. By using your home office or a designated area of your home on a regular and exclusive basis as the principal place for conducting your business, you will satisfy the IRS guidelines. The benefits of the allowed deductions from using your home for business purposes can be well worth the effort.  In real estate investing, these deductions are just another way of adding to your overall net worth due to the fact that you will be able to keep more of your earned income from your W-2 wage earning job. We encourage you to read the IRS publication and all of the examples given of how the IRS defines and interprets what regular and exclusive means and always confer with you accountant so that the guidelines are met.