5 Common Tax Deductions for Landlords
Take advantage of each tax write-off
If you own real estate and fall into the category of being a “landlord” then you should be aware of the top 5 most common federal tax deductions. As an owner of a rental property, there are certain rental expenses that you should document throughout the years so that you can monitor your financial statements and deduct accordingly.
So, what can you deduct as a landlord? Take a look at a few tax deductions you can claim on your federal income tax each year.
Repairs and maintenance
Repairs and maintenance are by far the most straightforward tax deduction to categorize and prove. As a rental property owner, you can write off the cost of repairs/maintenance done to your rental property throughout the year. For example: repainting the interior and/or exterior of the property, replacing broken items, fixing leaks, fixing gutters and floors. The maintenance of the home also takes into consideration paying a service or contractor to come in and complete the job.
You are entitled to tax deductions for travel to and from your property. Travel expenses can not include trips to your property to improve the home but rather for tenant complaints, driving to the store to fix a home problem, or delivering notices to your tenant. It is also acceptable to file airline fare, car rentals, hotels, and 50% of meal expenses if you live far away from your rental property.
Office or Home Office (space and items)
As a landlord, you work out of a fixed location; whether you have an actual office space (rent paid for a commercial office) or are working out of your home, you can deduct this expense on your taxes. You can also deduct the office supplies such as ink/printer paper, pencils/pens/etc, rental software, legal forms, phone bills…the list goes on. (Don’t forget about supplies used to advertise your home)
Oak City Properties Helpful Hint: Be careful deducting your home office because it is the most commonly flagged deduction by the IRS. If you work out of your home, the deduction is based on the idea that you do the majority of your business from the home . The amount you can deduct depends on the percentage of your home that your office actually takes up (square footage of home office).
Mortgage Insurance/Rental property insurance
You can deduct the premiums you pay for almost any insurance for your rental properties, including fire, theft, flood, and rental property insurance. If you have employees and run a small rental property business, you can also deduct the cost of your employees’ health insurance.
Property management fees or legal fees
You can write off any legal or property management fees used as operating expenses as long as the fees are related to rental activity. Examples of these fees include:
- Accounting advice and services
- Professional tax prep
- Engineering and consulting costs
- Legal fees/court filing fees
- Lease review and editing fees
- Property management fees
- On-site manager fees
- Association fees
As you can see, those are a ton of “fees” that you can write off each year on your federal tax returns.
At Oak City Properties, we make sure to work with you each step of the way when renting your property. Our full management property service will market the property, locate prospective tenants, and show the home. Once a tenant is placed in your rental property, we will: collect rent payments, provide 24/7 maintenance, help with accounting/tax services, assess and collect late payment fees. If you are interested in learning more, give us a call at (919)-232-9222 or check out our website: http://oakcityproperties.com
Want to read more about property management services? Here are a few blogs that may interest you: