Rentals - Helpful tools and the IRS audit.
Today I reconciled the rental account today. I use Quicken99 so that didn't take more than 10 minutes. Yes, I did say Quicken99. I was forced to upgrade to Quicken99 back in December 1999. It runs without any issues and I don't need all the bells and whistles that come with the new releases. Have you ever noticed that every upgrade runs slower and is more complicated than the older release? I do have the most current version of Paperport by Scansoft which I use to scan all documents. We don't keep anything on paper. Last year I was audited by the IRS and they seemed satisfied to use my scanned receipts and statements and Quicken reports. The only mistake I made was expensing (deducting the entire amount in one year) things like dishwashers rather than treating them as capital improvements (deducting the entire amount over a 5 year period). Silly IRS, I still get the deduction, but I'll take it in future years when the tax rates will be higher. However, since they found some items I expensed rather than capitalized and my Quicken reports made it so easy, they audited two more years using only my Quicken reports. Other helpful tools I use are MS Excel, MS Word, Dreamweaver and a cell phone with a built in Palm Pilot. Just FYI, Even though I buy the computers, printers, scanners and software for the Rental property, I only claim 1/2 of the cost so that I can use it for personal use without guilt. The IRS auditor didn't say a word about that other than saying it needed to be deducted over x years rather than all in one year.