You wouldn’t pay more than you had to on your every day expenses on your rental property, so why are you doing it with your taxes? Each and every year, many landlords do just that. Rental real estate has a host of tax benefits, far more than many other investments. Still yet, many landlords and property owners are paying much more on their rental income tax than they really should be. There are a few key benefits you need to know about that could mean the difference between you drawing a profit or not.
Did you know that interest is your highest deductible expense? From mortgage interest to the credit cards you may be using to pay for goods and services related to your property, don’t miss out on this deduction.
Though the full cost of a home or apartment complex isn’t fully deductible the year you bought it, you can get back some of that through depreciation. All this is, is deducting parts of the cost over the course of several years.
Whether your properties are all in the same town, or across the state, you are entitle to a tax deduction for the mileage you travel for your rental property. There are two common options for vehicles: deducting the actual amount of the expenses for it, or use a standard mileage rate. Ask your tax professional about this, as there are some restrictions. For longer term travel, make sure that you document everything. The IRS has been known to scrutinize this particularly.
Repairs you make to your rental property are fully deductible for the years in whichyou make them. The repairs have to be considered “reasonable, ordinary, and necessary”.
A home office
Any home office deduction will require certain minimum things. This isn’t just for the space you use, but also any home space that you use for your business. This may also include the computers and other equipment you use in it.
It’s really best to consult your accountant or tax attorney for your tax needs, however, if you haven’t been getting these deductions, it may be time to mention it. (Or switch to someone else.) There are a multitude of deductions that landlords can claim, so be sure you’re not missing out.