May 24, 2024


Mad about real estate

Rental Properties – Tax Advantages

You can now get tax advantages on your second property. Other than your prime property which you usually occupy any property that you purchase if you put up in rent then you can also earn tax rebate apart from your monthly rentals on it. This is how you can get the benefit.

Any invest that you make on the rental property for its improvement like the roof renovation or hardwood flooring you can get redemption on your tax. But there are some clauses that are not included in it like carpeting and painting. So it is always better to know the clauses before you undertake the job of improvement so that you are not over budgeted later.

Other than home improvement you can also get benefit if you have made any insurance towards the property like in case of fire or accident. Moreover any expenses that you bear towards the real estate agent like fees for the services for bringing in new tenants for the property also can earn you benefit in tax. Also if there is any expenses in the form of traveling like the air fare or the car rentals to the rental property as in case when the property is out of the town can also be claimed under the tax benefit.

Property depreciation is another way of getting the tax advantage. Most of the owners depreciate the value of the property every year and earn good redemption towards the tax. But this practice is not advisable if as an owner you are thinking of selling off your property because then the value of the property will be much lower than the actual market value of the property in the area.

If you could show that the income that you make on your rental property is much lower than the expenses you bear on the property then you can still earn good rebate on your tax. But for this you will have to hire a real estate property manager who will take account of your expenses on day-to-day basis. Although you too have be an active participant in the property management like renewing of the lease, interviewing the tenants or estimating the cost towards an expense for the property like in case of installing of a new lift or doing the exteriors and interior of the property.

Also the authorities announce special credits on properties like old buildings or low-income housing areas. As an real estate investor you can easy take the benefit on these properties as even for renovation work on these properties earn good tax advantage as the authorities want these properties to be utilized rather than let them deteriorate more. Therefore you must understand that your second property is more like a business asset to you rather than primary residence. As a real estate investor you can earn good wealth over these rental properties not just as monthly rentals but also in form of tax benefit. All you need here is good knowledge and keen interest in property management