Write off? Right on!

If you watched the Netflix series, Schitt’s Creek, you may remember the episode where David goes on a shopping spree for his new store, calling everything a write off. Johnny eventually asks him who is writing everything off and David says the government! While write offs are a helpful tool, the money still needs to come from somewhere for there to be a benefit. As David learns, you can’t just call things a write off to avoid paying for them. You also need revenue. We went back to Philadelphia this weekend for my 15th college reunion. We took our daughter but left our one year old back home. We did not fly first class. We did not eat out at the nicest restaurants. But we did make sure we were comfortable with a rental car and did everything we wanted to do during this trip. It all added up. At one point, I turned to Ken and asked, “wouldn’t it be great if we could turn all this into a business write off?” From what I can tell, there are two ways we could do this. The first would be to decide that the trip would serve as the annual meeting for our LLC. The meeting can take place anywhere in the world and, as long as you have a meeting once a year, it would qualify. At this point, our daughter would not be covered, but a large chunk of the trip would officially become write-off-able. The second way would be if we bought a rental property in Philadelphia. Based on what we have learned so far, going to check on the status of an investment property is a legitimate business expense (as long as you already own the property). We are not CPAs, so I do not know why that distinction matters. In my ideal world, this property would be a short term rental so we could also stay there whenever we go to my alma mater. However, even a long term rental far away from campus would theoretically open this up for us. Note from Ken: This is another power of Real estate investing. It has given us a new perspective on things like travel and vacation. We fully intend to use this new vantage as a means to realize real, tangible, financial savings on things we plan on doing anyway such as travel.  Philadelphia actually has a fairly appealing rent-to-price ratio (which I won’t go into explaining here), so it may be in the cards to integrate the city of brotherly love into our investment portfolio. That brings me to the point from Schitt’s Creek. At this point, we are just about to start earning a profit from investing. That means our business expenses are still exceeding our income. As tempting as it is to write something “off,” we still need to be careful to not exceed our expected annual income or we will be out the money personally for all of these business expenses. But it is fun to think about the potential for what we can do in the future. Note: None of this blog should be taken as tax advice or counseling.