What Is A Rental Property Tax Deduction
Posted on April 22, 2008 in the Property taxes category
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The National Taxpayers Union writes that as many as 60% of all homeowners are over-assessed and not in line with their home value. (“How To Fight Property Taxes” 2004 p.1) |
A rental property tax deduction is any expense that evolves from owning a rental property. If you spent money to maintain, conserve and manage a rental property, you can use that as a property tax deduction. The most common deductions will be yard care, maintenance, repairs, insurance payments, cleaning and the mortgage payment if there are any. Some other property tax deductions that most people forget about are fees for an accountant, fees for a lawyer, expenses for finding renters, fees paid to rental agencies for finding you a renter, any mileage that is accumulated for said property and depreciation for items included in the rental and of the property itself.
Depreciation Of The Property And Items In The Rental Unit
The depreciation of items in the rental unit may include anything you supply to the tenant such as appliances, furniture, blinds, curtains and other items you might supply for a tenant. You can use these items by depreciating them accordingly. The property depreciation is usually done over a longer period. This is an area for your accountant to handle since they have more experience with depreciating items and properties. You want it done correctly and at the proper time.
Agency, Lawyer And Accounting Fees
If you use a lawyer or an accountant for your rental property, you will use the fees you pay to them as a rental property tax deduction. This is also true for any fees paid to a rental agency that you use to find and scan potential renters. All these fees are tax deductible. This is also true for any advertising you do yourself to find a renter or tenant. These fees are deductible on your taxes.
Mortgage Payments, Insurance Payments And Property Taxes
If you pay a monthly mortgage payment, you can deduct the payment on your taxes. You will also deduct your mortgage interest and property taxes in another area of the tax forms. The insurance premiums that you pay on the rental property are also deductible. This includes any special insurance you need for flood or other weather related issues.
All Other Rental Property Deductions
If you pay someone to do yard work or shovel snow, you van deduct it as a service rendered. For a cleaning service, you will deduct this as well. If you do any repairs or any type of maintenance on the property, you can deduct this as well. Remember to keep track of all the miles you drive to and from the property or to stores to get supplies for work done on the rental property, these miles or actually a percentage of them are tax deductible.
Because a rental home is just like a business, you are allowed many more deductions than if you were to just live in the house yourself. In some cases, this makes sense, but in some cases, it causes more paperwork and you have to keep the property in working order just as you do with any profitable business or you will lose your investment.
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11 Responses to “What Is A Rental Property Tax Deduction”
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Thanks for mentioning all of these extra deductions. We haven’t traditionally included anything outside of the common deductions. Maybe it’s time to find a new accountant??
Wow, I got on this page accidentally but all this tax advices made great impression on me, I’ll be back soon
That is a good list. I tell my investors that if a penny leaves your pocket for your rental it’s very likely it’s deductible. Save every receipt, but at the same time if you have to pay cash for something just keep records. If it’s smaller items you will not have issues deducting them also. For example I used to pay a high school kid to take care of the lawn for me on one property, but he only took cash.
Very valuable information. I will be sure to pass on to my investor clients. Thanks for the insight and comprhensive list!
Many real estate investors tell us our roof cleaning service is a write off.
That’s a nice list
I think our accountant isn’t up-to-date!
Thanks for posting this. So many people don’t really understand how depreciation and other investment property deductions work.
maybe someone can explain depreciation recapture step by step
Any expense that you inccur on your rentals is tax deductable because the federal government views it as a business. Why should you pay taxes on a business expense. Especially when someone else ends up paying taxes on the out flow anyways.
Happy landlording to all.
This may be a weird question but you may know: is it true that the bank cannot foreclose if you get a lawyer who knows the laws that when a bank sells your note without your knowing, they have no legal rights to foreclose?
Thank you for elaborating this article . I had a lack if knowledge when it comes to property and tax deductions . Nice blog .