Rental Property Tax Deductions Often Overlooked

Are you a property manager or landlord? You might be overlooking some important tax deductions that can help save you money. Knowing more about these deductions and taking advantage of them will help you improve profit margins. Let’s take a look at some of the deductions that most landlords don’t realize they can use to their advantage. Knowing about them can make a big difference in your tax bill this coming year.

1. Property Depreciation

When you buy a new rental property, tax law doesn’t allow you to claim the full amount as expenses immediately. The law instead allows you to depreciate it over a long time period. This period is usually twenty to thirty years. Since it’s such a long time, many landlords don’t bother to take it at all – a big mistake. Make sure that you’re getting the proper depreciation deduction for your property.

2. Insurance Premiums

If you’re a landlord, there’s a good chance you’re already paying for several different insurance policies. All of these premiums qualify as tax deductions, which many people don’t know. You can add in liability insurance, building insurance, worker’s insurance for people who manage your properties and several other types when you file your next return.

3. Mortgage And Credit Card Interest

Most individuals take out a mortgage to pay for our rental properties. This comes with a significant amount of interest every year. Fortunately, that interest can be deducted from the amount you have to pay in taxes. Any rental expenses paid by credit card can have their interest deducted in the same way.

4. Bills For Repair And Maintenance Of Your Property

Keeping your rental property in good condition is also a tax deductible expense. Any maintenance and repairs that are needed to make sure that the home you rent is up to code and safe to live in can be deducted. However, improvements to make the property more valuable do not count. Make sure you get a receipt from any contractor or repair person you deal with to help make filing your taxes easier.

5. Travel Costs

If you need to travel to fix property, collect rent, or engage in other property related activities, you can claim travel costs. If the properties are abroad, this means airfare, hotel expenses and more. If the properties are in the same country, fuel costs and vehicle repair bills related to the trip will apply. Keep a close watch on these, though – tax authorities are careful about allowing these deductions.

Your rental property is an important factor in the way that your taxes are figured. Make sure you understand the relevant taxes in your county and which deductions you’re allowed to take under the law. You could significantly reduce the amount that you have to pay each year, simply by reporting these expenses on your tax form.