When you purchase property with the intent of renting or leasing that property to others, you have become a business person with a desire to make profit (or at least most investors want profit). Rental tax deductions can become a critical part of your profit plan and can over the long haul, turn many poor-performing real estate investments from a loser into a winner. You need to be intimately familiar with the tax codes and provisions in this area, or at a minimum, you should have a strong relationship with a tax professional who can advise you wisely.
Some of the areas regarding rental tax deductions where you should be knowledgeable are:
Improvements vs. Repairs/Maintenance: Make sure you know the difference. Repairs are deductable; improvements are depreciable - there is a BIG DIFFERENCE in the way these are handled on your return! Talk to your tax professional to get this straight!
Home or Condo Owner's Association Fees: These should be deductable, but check with your CPA for sure.
Real Estate Taxes: Any state property taxes that you pay should be deductable. Again check with a CPA or tax professional to be sure.
Other Acceptable Expenses:
- Advertising in the newspaper for tenants and cost of signs
- Cleaning supplies
- Mortgage and other interest paid for the rental property
- Cost of insurance-hazard, flood, fire, or liability
- Payments for service such as lawn care, pest control, and trash collection
- Payments for maintenance of the property
- Professional fees for tax advice and tax return preparation fees for the part of the tax return dealing with rental property
- Cost of new locks and keys as well as safety devices including smoke detectors
- Commissions paid for finding tenants and/or property management services (be careful here as the rules can change based on what direct and indirect management of the property that you personally perform)
- Cost of necessary transportation to and from the rental property for the purpose of maintenance, management, rent collection, picking up supplies, or checking the property (if you use your personal vehicle, either keep track of actual expenses and miles traveled or just the miles traveled)
- Cost of renting equipment used for the rental property
- Depreciation of the property (not including the land)
- Depreciation of appliances, furnishings, and improvements
- Any long distance calls associated with your rental property
- The court costs for evicting a tenant
- Legal fees pertaining to the rental property or tenants
- Expenses incurred when the property is not rented as long as you are actively trying to rent the property (even if you are renting it for the first time)
- Having a home office used to manage your rental holdings (be careful here as this may flag you for and audit)
The HBH Group is an expert real estate team with extensive experience in Internet marketing, staging and creative financing. Call us today for a no obligation visit to see how we can help you sell your home in this more difficult market!
Our real estate team is connected to:
- Buyers and sellers of commercial and residential real estate.
- Investors in both the above classes of real estate.
- Property acquisution, leasing and management services for investors of commercial and residential real estate.
- Business brokerage to help you find and acquire a local business.
We would love to assist you as you invest in Texas and the greater Austin area. Call us to find all we can offer you and to ask for a FREE information package!
This information is brought to you as a public service of the The HBH Group Realty Team with Keller Williams Realty. You can learn more about us at our websites located at: http://www.TheHBHGroup.com/ and http://www.TheHBHGroup.biz/ or contact our offices at (512) 439-3772 or toll-free at (877) 268-1877.
We teach a monthly real estate investment seminar in the Greater Austin area and YOU ARE INVITED to this FREE event. Simply call our offices to reserve you seats! Also ask about the investors club that we are forming in the North Austin markets currently - We would love to have you participate!
Here are some other Buyer's Resources from Our Website: Seven steps to buying your home
Deciding how much house you can afford Making your home wish list Opting for new home construction
How can a real estate agent help me? 10 things you should ask a real estate agent
Location, Location, Location Mortgage Calculator Contact us about buying your home
And some seller's resources as well:Eight steps to selling your home
How can a real estate agent help me sell my home Practicing good seller's etiquette
How to price to sell and still make a profit Understanding the buyer Increasing your home's appeal
Mortgage Calculator Contact us about selling a property
The HBH Group/HBH Property Management
101 E. Old Settlers Blvd., Suite 190
Roundrock, TX 78664
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