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Tax Advantages For Landlords

As a landlord there are a lot of tax benefits you can take advantage of. We’ve listed the top 11 here for you and details about each one.

1. Interest

Landlords can deduct mortgage interest payments on loans used to acquire or improve rental property. Landlords can also deduct interest on credit cards for goods or services used in a rental activity.

2. Depreciation

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The actual cost of a house, apartment building, or other rental property is not fully deductible in the year in which you buy it. Instead, landlords get back the cost of real estate through depreciation. This involves deducting a portion of the cost of the property over several years. Talk to your accountant to get more in depth details.

3. Repairs

Good examples of deductible repairs include repainting, fixing gutters or floors, fixing leaks, plastering, and replacing broken windows. You can’t deduct the cost of improvements. An improvement adds to the value of your property, prolongs its useful life, or adapts it to new uses. Examples are adding a deck, a new fence or roof.

 

4. Materials and Supplies

A lot of people think this is just maintenance supplies like paint, caulking, patch work etc.  But this may also include office supplies and equipment you use to manage the property.

5. Local Travel

Landlords are entitled to a tax deduction whenever they drive anywhere for their rental activity. For example, when you drive to your rental building to post a notice or go to the hardware store to purchase a part for a repair, you can deduct your travel expenses.

You have two options for deducting your vehicle expenses. You can:

  • deduct your actual expenses or
  • use the standard mileage rate established by the IRS

6. Long Distance Travel

If you travel overnight for your rental activity, you can deduct your airfare, hotel bills, meals, and other expenses. If you plan your trip carefully, you can even mix landlord business with pleasure and still take a deduction.

7. Home Office

Landlords may deduct their home office expenses from their income if they meet certain requirements. This deduction applies not only to space devoted to office work, but also to a workshop or any other home work space you use for your rental business. This is true whether you own your home or apartment or are a renter.

8. Employees and Independent Contractors

Whenever you hire anyone to perform services for your rental activity, you can deduct their wages as a rental business expense.

9. Casualty and Theft Losses

If your rental property is damaged or destroyed from a sudden event like a fire or flood, you may be able to obtain a tax deduction for all or part of your loss. These types of losses are called casualty losses. As always, talk to your insurance agent and accountant.

10. Insurance

You can deduct the premiums you pay for almost any insurance for your rental activity. This includes fire, theft, and flood insurance for rental property, as well as liability insurance. And if you have employees, you can deduct the cost of their health and workers’ compensation insurance.

11. Legal and Professional Services

Finally, you can deduct fees that you pay to attorneys, accountants, property management companies, real estate investment advisors, and other professionals. Your membership to Rent Like a Pro would fall under this category.

You can see why you would want to take advantage of all of these tax benefits. If you have questions, be sure to put them in our forum!


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