Our Investment Property’s 2012 Schedule E, Final Profit/Loss

18 Dec

From the department of things-I-meant-to-do-a-long-time-ago, I wanted to share the income and expenses portion of our 2012 Schedule E, which pertained to our first rental. In anticipation of the upcoming tax season, I’m looking forward to seeing how our numbers will change vs. last year.

taxes

(photo by 401(K) 2012)

This is basically the result of the bookkeeping worksheet, plus any category modifications made by our tax professional. I do wish I had more insight into what she changed and why, but by the time I was finally finished pulling everything together I didn’t care anymore.  🙂

Income Unit #1 Unit #2
Rents received $10,500 $10,500
Expenses Unit #1 Unit #2
 Advertising  $0  $0
Auto & Travel $159 $208
Cleaning & Maintenance $0 $0
Commissions $0 $0
Insurance $373 $373
Legal and other professional fees $200 $200
Management Fees $0 $0
Mortgage interest paid to banks, etc. $3,118 $3,118
Other interest $0 $0
Repairs $269 $899
Supplies $151 $151
Taxes $2,106 $2,106
Utilities $0 $32
Depreciation expense or depletion $2,843 $3,169
Other: HOA Dues $300 $300
Other: Office Expenses  $6  $12
Other: Transaction Fees $6 $15
Total Expenses $9,531 $10,583
Subtotal $969 -$83

Total rental real estate income or loss in 2012: $886

All that work and we only made $886?! Well, it’s a little more complicated than that. First, the depreciation on the property provided a tax shelter for 27% of the income – which gives me a realized net income closer to $6,500. Then imagine the potential of a mortgage-free property – which could happen in the next 5 to 22 years – and we’d net an additional $6,236 a year, almost doubling the income. Finally, consider the likely property appreciation and increase in rental rates 10-20 years from now and you start to grasp the real (albeit long-term) value of real estate investing.

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One Response to “Our Investment Property’s 2012 Schedule E, Final Profit/Loss”

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  1. 2013 Rental Profit/Loss Statement (Schedule E) | Rental Realities - May 10, 2015

    […] Flow vs. Estimated For tax purposes, we reported a passive activity loss of $1,680, compared to a net gain of $886 in 2012. In actuality, depreciation provided a tax shelter for 25% of the income, or almost $10k. This […]

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