April 15, 2013

We're Getting a Nearly $6000 Tax Refund.

Its tax day if you haven't heard.

My wife and I actually got our taxes filed a couple weeks ago.   The result this year is that we're getting back a little short of $6,000 altogether.   Close to $5000 from the IRS and about $1000 from the state.

As I said we filed a couple weeks ago so it was the end of March.  Thats not as bad as some years, a couple years ago we filed on the eve of the 15th.   We have been kinda slow to do our taxes in recent years for a couple reasons.   First of all my Dad and I own a couple properties 50/50 which are located in the city he lives and he manages those properties.  That means that I have to wait for my Dad to get all his numbers figured and give us the information.   My Dad isn't really slow or fast about doing his taxes but he usually gets them done in March at least.  In any case we have to wait for him and then schedule our taxes after that.    Second reason we take a while is simply that it takes a while to organize all our information.   Lastly we have to give the information all to the CPA and then wait for him to actually fill out the forms for us and naturally he's got a pretty big backlog this time of year.   So anyway, thats why we are usually in April before we're done.  

Some of that $6000 refund is bad news actually.   A sizable chunk of our return is due to rental expenses.   And in fact this year we exceeded the passive income limit due to our total income and we couldn't claim all our rental losses against my ordinary income.   We had about $9000 extra in losses that we have to carryover to a future year.

Unfortunately in 2012 we had some pretty major expenses at our rentals.    Some of it wasn't anything out of the ordinary or anything that annoyed me.   We chose to cut down a couple trees on one property and that cost $1000.   I won't have to cut those trees down again and I won't have to pay for pruning and I won't have to worry about the tree roots ruining the foundation or getting into the pipes, so that was a good idea.     Some of the costs were basic routine repairs and maintenance like some plumbing fixes, replace a broken light switch, etc.   On the other hand we had some other costs that weren't routine.  We had to replace carpet after one tenant left and that carpet was only 2-3 years old.   Those same tenants also did a lot of misc. damage that was far above their deposit.   All of that came out of pocket and was not an expense that you ought to expect with a normal tenant.   We also had a broken pipe in that property that caused a lot of damage.

If we had a big fat profit from our rentals then we'd have to pay the IRS but due to our losses we are getting some cash back.   I'd much rather have profits than losses.

Most of the return is not due to the impact of rentals though.  Its a mix of various things.   I actually showed a bit of a loss on my company stock transactions even though they profited us.   We had charity deductions.  


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