Landlords, it is time to take advantage of the many available tax deductions at your disposal. All too often, millions of landlords end up paying exceedingly more than they have to on their rental income taxes. They are not aware that real estate rentals provide more tax benefit than any other investment. These are the benefits that allow you to earn a greater profit on your rental property instead of you using losing valuable income. Here are 8 of the top tax deductions for you, landlords.
Usually, a landlord’s greatest and most lucrative deductible expense comes from interest. Two of the most common deductibles come from mortgages and credit cards. In regards to mortgage interest payments, landlords can deduct these interest payments for tax season next year. With credit cards, landlords deduct from the interest on the credit used for the services or goods of the rental property.
It is no surprise that repairs are necessary and common. However, most landlords do not realize that these repairs are fully deductible. The year that these repairs occurred is the year that they are deductible, so make sure to keep account of each repair when it takes place. The most common repairs are repainting, gutter or floor maintenance, plastering, window replacement, and roof-leaking repairment.
As a landlord, you drive a lot. Some days landlords drive to the tenant to manage a complaint and other times they drive to the hardware store to fix the part that the tenant might be complaining about. Great news: a landlord can deduct all of their work-related travel expenses. Landlords can deduct their actual vehicle expenses such as gasoline, upkeep, and repairs. They may also deduct from the mileage rate on the vehicle travelled with.
Your Home Office
You guessed it – landlords can deduct straight from their income taxes on all the expenses used for their home offices. This deduction does not only apply to home offices, but also applies to workshops or any other workspace used for rental business. If you are a landlord in your own home, apartment or a rental, this still applies to you.
Take advantage of real estate deductibles through depreciation. As landlords, the cost for houses, apartment buildings, or any other rental property is not deductible in full in the year it is paid for. However, landlords will receive back the real estate cost through depreciation. The deductibles come in portions from the full cost over a number of years.
New Pass-Through Tax Deduction
This is an exciting year for landlords. Many landlords will be able to qualify for the new pass-through tax deduction. This is a special deduction established by the 2017 Tax Cuts and Jobs Act so that landlords may deduct from their income instead of their rentals. Landlords have two different options, depending on their income. They can deduct 2.5% of their rental property cost, plus 25% of what they pay their employees or they can deduct 20% of their net rental income.
Legal or Professional Services
At some point in managing your property, you will need legal or professional services. Landlords have the ability to deduct the expenses used on legal services or the professionals they hire. Some examples include attorneys, property managers, investment advisors, and accountants. Any of these expenses can be deducted so long as the expenses were used for rental activities or work-related operations.
A lot of the time, landlords spent a great deal of money on the insurance they buy to protect their rental properties. Luckily for landlords, almost any premiums paid for rental insurance can be deductible. Some major rental property premiums that are covered by deductibles are landlord liability, fire, flood, and theft. Another benefit is the cost of insurance for employees’ health and compensation qualify as deductibles.
Where to Start
If property management is something you are interested in, start with Peace of Mind Real Estate Group. This is a team dedicated to helping you reach your goals and win every time with their unique services and solutions. Call us a call at (954) 281-7395!