Automating your rental property deductions? Sounds fantastic, right? Streamlining expense tracking and claiming every eligible deduction can significantly boost your returns. However, before you fully embrace auto-deduction software, be aware that aggressive or inaccurate claims can raise red flags with the IRS.
What kind of flags? Unsubstantiated expenses, claiming personal expenses as business deductions (like excessive travel or repairs), and disproportionately large deductions compared to your rental income are common culprits. Overly aggressive depreciation schedules or claiming deductions for expenses already covered by insurance proceeds can also trigger an audit.
While automation can be helpful, it's crucial to understand the rules. Review all automatically generated deductions carefully. Double-check expense categorizations and ensure you have proper documentation for everything. When in doubt, consult with a qualified tax professional to avoid costly mistakes and keep the IRS at bay. Staying informed and diligent is key to enjoying the benefits of rental property ownership without the audit anxiety.
