New Landlord: reconstructing your records or expenses for filing taxes

[jmr5x]

We jumped head over heels into the landlord game this past year.  Before I knew it, we had rehabbed and rented out 5 units and I did not keep very good records and receipts (lesson learned).  I saw online that if audited you can reconstruct your records and expenses for when you write off your deductions.  Does anyone have any further information on this topic?  It was very vague on the Google searches I did.  Thanks!

[Drifterrider]

Go to the IRS web site.

I am not an IRS agent however, reconstructed receipts may be acceptable to support your expenditures.  It falls under the reasonability test (is what you reconstructed reasonable).  Use photo copies of checks cashed, copies of credit cards expenditures, work invoices marked paid, etc.  Credit card statements that specify places such as Lowe's, Home Depot, Kil-em-ded exterminator, etc are helpful. 

DO NOT WAIT to see if you are audited.  Start the work now and date your reconstructed receipts.  Remember, the burden of proof is on you, not on the IRS.

[skuzuker28]

Go to the IRS web site.

I am not an IRS agent however, reconstructed receipts may be acceptable to support your expenditures.  It falls under the reasonability test (is what you reconstructed reasonable).  Use photo copies of checks cashed, copies of credit cards expenditures, work invoices marked paid, etc.  Credit card statements that specify places such as Lowe's, Home Depot, Kil-em-ded exterminator, etc are helpful. 

DO NOT WAIT to see if you are audited.  Start the work now and date your reconstructed receipts.  Remember, the burden of proof is on you, not on the IRS.

+1

Plus, you'll want that information anyway for when you file your taxes as the improvements increase your depreciable basis in the properties and/or offset the rental income.