In the April 11, 2011 issue of the Nevada Appeal, CPA John Bullis predicts that owners of real estate property that is rented “should be aware that the IRS has been urged to increase the examinations of rental real estate.”
Mr. Bullis references a 2008 report by The Government Accountability Offices that states in 2001 at least 53 percent of taxpayers who owned rental property misreported their rental activity. The returns the IRS examined found potential net misreporting of an estimated $13 billion in taxes. So the IRS will be doing more audits of returns with rental properties in the future.
The IRS will also be checking vacation home rentals to see if the number of days occupied and used for personal purposes are reported correctly.
Mr. Bullis advises owners to be prepared to show adequate documentation and complete records for their rental activity and to save all those records for at least four years after the return is filed.
John Bullis is a certified public accountant, personal financial specialist and certified senior advisor serving Carson City, NV for 45 years. He is founder emeritus of Bullis and Company CPAs, LLC.