Tax Deductions Every Landlord Should Know About

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Tax Deductions Every Landlord Should Know About

ManageCasa is made to make the jobs of Landlords easier. Today, ManageCasa is bringing to light important tax deductions that can help Landlords become more profitable. (Note: Landlords should keep thorough records and receipts for potential IRS audits. In the event that you fail to have proper receipts or validate the necessity of the expense for the rental business, Landlords will need to pay amount due, with interest).

Some of these items are audited more closely by the IRS, so having a good organization method may save you a ton of headaches come tax season. Use ManageCasa to store all important documents, including photos and receipts for items you are expensing as tax-deductible.

1. Interest

Interest is usually the largest deductible expense. The main interest expenses include mortgage interest payments on loans, mortgage points to purchase or refinance a rental property, and credit card interest on items used for the property, 

2. Depreciation

Landlords can get back the cost of real estate through additive amounts of depreciation, since the actual cost of a property is not fully deductible within the year that it was paid for. Landlords can capitalize on the depreciation of the value of the structure, the depreciation on property features (e.g., HVAC system, carpets, etc.), and on physical assets such as equipment and appliances, computers, business cars, etc.

3. Repairs

Every property needs repairing from time to time; a repair is an urgent, necessary task to maintain the condition of a property. Examples of deductible expenses from repairs include items such as:

  • Heating or Air Conditioning Repairs
  • Plumbing Repairs
  • Painting and Floor Repairs
  • Fixture Repairs
  • Contractor fees
  • Associated Rental fees

4. Maintenance

Maintenance and “Repair” costs should be differentiated; maintenance fees are defined by expenses for improving or maintaining the condition of a property, even if something is not necessarily “broken”. Examples of maintenance fees are: Landscaping and Tree Trimming

  • Landscaping Fees
  • Homeowner Association Fees
  • Pest Control Fees
  • Light Bulbs and Smoke Detector Batteries
  • Cleaning supplies

5. Travel for Business

For all travel related to conducting business on a property, including airfare, transportation, car rentals, lodging, meals, and incidentals. However, make sure to keep close documentation for the IRS may audit the purpose of some expensed items.

6. Insurance

All business-related insurance premiums, mainly insurance owned as a result of owning a property, are tax deductible. Examples of almost all business-related insurance policies include:

  • Personal Umbrella Insurance
  • General Liability Insurance
  • Homeowners Insurance
  • Mortgage Insurance Premiums
  • Damage and Liability Insurance
  • Flood Insurance Riders
  • Theft Insurance
  • Workers’ Compensation Insurance

7. Legal and Professional Fees

Most landlords require the help from other professionals in order to smoothly handle their busy jobs. Legal fees, from lawyers, financial / tax advisors, or accounts, structural consultants, and even fees associated with these services can be expensed.

8. Office, Operating Fees

Landlords have different styles for their operations; perhaps small business owners will happily work out of their homes, and some prefer to rent out an office space. For office space and operating expenses, common items that are expensed include:

  • Office Space Rent
  • Phone and Utility bills
  • Stationary (pen, paper, ink)
  • Legal forms
  • Rental Software (e.g., ManageCasa)
  • Advertisement fees