I wanna add a different perspective here. I used to ONLY use free tax filing until last year when I started a small side business. My taxes suddenly got way more complicated with Schedule C, business expenses, quarterly payments, etc. I tried to use the free version but kept second-guessing every decision. Eventually broke down and paid for TurboTax Self-Employed, and honestly it was worth every penny. The guidance on business deductions alone saved me way more than the cost of the software. So maybe the answer is: use free when your situation is simple, but be willing to pay when things get complex. Just my 2 cents (which I properly reported as income lol).

You're absolutely right to question this! I've been in the same boat for years - simple W-2, maybe a 1099 here and there, standard deduction. The free options have worked perfectly for me. I think a lot of people just don't know about the truly free options. The big companies spend millions on advertising and make their free versions hard to find (as someone mentioned with the TurboTax controversy). Plus there's a psychology factor - people assume "free" means lower quality, even when it's literally the same calculations. That said, I've noticed the free services can be less hand-holdy. They assume you know what you're doing and don't walk you through every possible deduction like the paid versions do. For someone confident with basic taxes like us, that's fine. But I can see how someone who's nervous about taxes might prefer paying for more guidance and support. The real trap is when people get upsold mid-way through filing. You start with "free" then discover you need to pay to actually submit, or to include a form you didn't expect. Always read the fine print!

As someone new to partnership rental real estate, I'd strongly recommend getting familiar with the concept of "basis" in your partnership interest. This is crucial for understanding how much of the partnership losses you can actually deduct on your personal return. Your basis starts with your initial investment plus any additional capital contributions, and it gets adjusted each year by your share of partnership income, losses, and distributions. The key limitation is that you can only deduct losses up to your "at-risk" amount and basis in the partnership. With rental properties, this can get tricky because non-recourse mortgage debt (where you're not personally liable) doesn't increase your at-risk basis the same way recourse debt does. However, there are special rules for real estate that allow qualified non-recourse financing to count toward your at-risk amount. Given that your partnership has significant mortgage interest ($85,000 annually), understanding how the debt affects each partner's basis and at-risk limitations will be critical for maximizing your loss deductions. Make sure whoever prepares your taxes understands these partnership basis calculations - it's an area where many general tax preparers make mistakes that can be costly.

As someone who recently navigated a similar partnership rental property situation, I wanted to add a few practical tips that might help with your first year: One thing that caught me off guard was the timing of estimated tax payments. Since partnership income/losses flow through to your personal return, you might need to adjust your quarterly estimated payments based on your projected K-1 results. With $175K in rental income but significant expenses, your partnership will likely generate either small income or losses, but the timing of when you receive your K-1 might not align with when estimated payments are due. Also, consider setting up a separate tracking system for any out-of-pocket expenses you pay directly for the partnership properties (if your agreement allows this). These might include emergency repairs you cover personally or professional fees you pay on behalf of the partnership. Make sure you have a clear process with your partners for how these get reimbursed or allocated, as they can affect both your basis in the partnership and your deductible expenses. Finally, since you mentioned this is a small 4-person partnership, make sure everyone is on the same page about record-keeping standards. Inconsistent documentation among partners can create headaches when the partnership's accountant is preparing the return and your individual K-1s.

If your gain is under the exclusion amount ($500k married, $250k single), you might not even need to report the sale on your tax return at all, even with the home office situation. IRS Publication 523 has all the details. Saved me a ton of headache when I sold last year!

Based on your situation, you'll likely need to deal with depreciation recapture on the 12% business portion of your home, but it shouldn't be too painful. Since you lived there 3.5 years and made $250k profit, you're well within the married filing jointly exclusion of $500k for the residential portion. The key thing to figure out is exactly how much depreciation you claimed over those years. If you used the actual expense method (not the simplified $5/sq ft method), you would have been depreciating 12% of your home's basis. That depreciation gets "recaptured" at a maximum rate of 25%, not your regular capital gains rate. So if you claimed, say, $10k in total depreciation over 3.5 years, you'd owe taxes on that $10k at the recapture rate. The remaining gain on the business portion might also be taxable as capital gains, but only to the extent it exceeds the depreciation you took. I'd recommend pulling together all your previous tax returns that show the home office deduction and adding up the depreciation amounts. That will give you a good ballpark of what to expect. Consider consulting a tax pro if the numbers are significant - this is one area where a small mistake can be expensive!

Just wanted to add that if you're worried about your bank asking questions, you can proactively contact them before making the deposit. I sold my boat last year for $32k and got a cashier's check. Called my bank beforehand, explained the situation, and they noted my account. Made the deposit super smooth and they even waived the normal hold period since I gave them a heads up.

One thing I haven't seen mentioned yet is keeping records of the equipment's depreciated value from your company's books if possible. When businesses sell off old equipment, they often have it listed at a depreciated book value that's much lower than what you might actually sell it for. If your company can provide documentation showing the equipment's book value when you purchased it, that helps establish a clear paper trail for the transaction. Also, since you mentioned the buyer is a local computer refurb company, they'll likely have their own documentation requirements for purchasing inventory. Make sure you get a proper invoice or purchase agreement from them that clearly states what equipment is being sold. This creates a clean business-to-business transaction record that banks and the IRS can easily understand if questions ever come up. The certified check approach is definitely the way to go - it's much cleaner than splitting payments, which could actually create more paperwork and potential confusion rather than less.

Does anyone know how the mortgage interest deduction works in this situation? If I own 3 properties (my primary home, a vacation home, and my mom's rental that's below market), can I still deduct the mortgage interest on all of them? Tryin to figure out if I'm hitting some kinda limit.

One thing I haven't seen mentioned yet is the importance of keeping detailed records of all your expenses related to the property. Since you're renting at below market rate, the IRS may scrutinize your deductions more closely if you're ever audited. Make sure to track everything - property taxes, mortgage payments, insurance, maintenance, repairs, even mileage when you drive over to check on the property. If the IRS does limit your deductions proportionally (like others mentioned with the 75-80% rule), you'll want solid documentation to support every expense you're claiming. Also, consider getting a formal appraisal or at least documenting comparable rentals in your area when you set the rent. This creates a paper trail showing you made a good faith effort to determine fair market value, which helps justify your rental amount if questioned later. I learned this the hard way when my accountant couldn't find enough documentation to support my below-market family rental and I had to scramble to recreate everything during tax season.