Whether you are already a landlord or are thinking of becoming one, you have probably asked yourself, "What can I deduct?", or "How can I make this more profitable for me?"
Taking advantage of all possible deductions can make the difference between losing money and truly earning a profit on a rental property. While the list below is not a complete list of all deductions available to you, there may be some that you have overlooked. Remember, if in doubt, always consult a tax professional .
1. INTEREST
Interest may be a landlord's single largest deduction. In addition to mortgage interest payments, you can also deduct interest on credit cards purchases for goods or services used in a rental activity.
2. DEPRECIATION
As your tax professional has probably already told you, the actual cost of a rental property is not fully deductible in the year in which you purchased it. Landlords get back the cost of real estate through depreciation.
3. REPAIRS
The cost of repairs are fully deductible in the year in which they are incurred, provided these repairs are ordinary, necessary and reasonable. Good examples of deductible repairs include painting, carpet cleaning, general cleaning services before move-in. Remember though, that there are true repairs and there are improvements. Always consult your tax professional.
4. TRAVEL
A commonly missed deduction is travel, especially when the landlord lives in the same area. Landlords are able to claim a deduction whenever they drive anywhere for their rental activity. For example, when you drive to meet with your property manager, your insurance agent, etc., you can deduct your travel expenses.
Landlords living in other towns, states, or even countries can also deduct travel expenses. If you travel overnight you can deduct your airfare, hotel bills, and meals.
Remember, overnight travel expenses are closely scrutinized, so to stay within the law, properly document your travel expenses.
5. HOME OFFICE
Provided certain minimal requirements are met, landlords may deduct their home office expenses. Remember that this applies whether you own your home or apartment or are a renter yourself.
6. PROPERTY MANAGEMENT SERVICES
All fees associated with professional property management are deductible. This includes leasing fees, monthly management fees, etc.
7. CASUALTY AND THEFT LOSSES
Should your property be damaged or destroyed from an event such as fire or flood, you may be able to deduct all or part of the loss. Your deduction will be determined by factors such as how much of the property was destroyed and whether the loss was covered by insurance.
8. INSURANCE
Insurance, such as fire, theft, flood, and landlord liability insurance are all deductible.
9. LEGAL AND PROFESSIONAL SERVICES
Remember, you can deduct fees that you pay to attorneys and accountants, real estate investment advisors, as long as the fees are paid for work related to your rental activity.
Fore more information on our property management services, visit us at www.myhomeleasing.com, or give us a call, 704-927-4432.
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