Many landlords fail to take advantage of various deductions available from their income on a rental property and they pay more than what they should have. There is a whole variety of deductions for taxable income, generated by a rental property, for a property owner.
If the landlords take these deductions into consideration, they can then save certain amounts issued as tax and earn hale and hearty revenue.
One of the easy opportunities available to the landlord is the deduction on interest. The rental property owner can deduct his taxes by showing the amount he is paying towards mortgage interest and various debts he has acquired for buying and maintenance on his rental property. Goods or services incurred for and by the rental property, using credit cards is also deductible.
You can also avail of the deduction available for depreciation of the rental property and depreciation available on items which is a part of the rental property; such as washing machines, furniture, etc. This option on deduction for depreciation can be availed after the year in which you brought the rental property. This way, the landlord can get the whole cost of the property over the coming years.
The cost of repairs on your rental property can be deducted from the tax as well. Repairs which are reasonable and mandatory can be shown for and be a cause of getting a deduction.
When a landlord travels to solve any issue related to his rental property, this can be shown as ‘travel expense’ and could attract a tax discount. If you are using your vehicle for business reasons related to your rental property, you can also show the expenses which you spent on your vehicle, to get that amount deducted from tax.
Furthermore, you may also get a deduction for the maintenance of your home office. This includes the expenses incurred on your home office. Before you apply for a reduction on tax based on your home office, make sure that you qualify for the minimum requirements set forth for a home office.
The salary you pay to your employee(s) who look after your rental property or the bills of the individuals whom you have hired for maintenance of your property, are all deductible from your taxable income.
Any theft or casualty subjected to your property can be raised for getting a deduction. The amount of deduction you can qualify for, is based on how much of the damage has happened to your property. Natural disasters like fire or flood bringing a total or partial damage to your property also qualifies and they are called casualty losses. You can get a part or full deduction on the extent of the damage(s) upon your property.
The amount paid as insurance premium on the insurance of your property like insurance on natural disasters or the premiums paid on the health and workers’ compensation insurance; can be raised to get a deduction on tax of your rental property. The fees you pay for professionals like attorneys, accountants, and real estate maintenance agencies you hire for maintaining the operation of your rental property, can be declared for a deduction on your tax. This will show as ‘Operational Expenses’.
You can make your investment on rental property a success story if you sensibly and smartly use the various reductions and live off above your tax.