No one really likes to deal with taxes, but avoiding them until the end of the year can result in missed opportunities to write-off expenses. Thinking about deductible expenses now can really help you save money—especially if you’re a landlord. Owning a rental property can provide more tax benefits than you might think. Let's take a look at some tax write-offs for landlords.
Here are the top 5 tax write-offs for landlords
If you own a rental property, then you know first hand the expense of maintaining a rental. From small home repairs to costly turnovers, at some point or another you've had to make a repair. Did you know that the cost to fix the plumbing, paint the walls, and repair the kitchen cabinet is tax deductible?
Repairs on your rental property are considered a business expense. Be sure to save receipts and invoices for all repairs made on your rental so that you can claim the expense on your next tax return. Home repairs are deductible within the year they were made. Some good examples of write-offs include labor and supplies to paint walls, replace locks, patch holes in walls, and replace broken windows.
Wages: Most private rental property owners either manage their own property or hire a property management company, so a write-off for employee wages won't generally apply. If you hire part time help (such as an assistant or maintenance person) and you pay that person as an employee, then you can write-off their wage as an employment expense. However, this type of write-off is more common for large apartment complexes and property management companies.
Independent Contractors: Owners of rental properties sometimes decide to hire a third party to complete the turnover work, rent the home, manage tenants, and/or make random repairs and upgrades. These third party workers are usually contractors such as plumbers, electricians, landscapers, roofers, and appliance repair technicians. You may also choose to hire a property management company to manage the work for you. Anyone you hire to repair, maintain, or manage your property is an expense that can be written-off during tax season.
When hiring an independent contractor or company for your rental property, it's important to keep the contractor's IRS form W9 and submit the amount you paid for them via the IRS Form 1099-MISC when you file your taxes.
Travel time is one of the most overlooked tax write-offs for landlords. Did you know that you can deduct the cost of travel related expenses you incur while managing your rental property? This may include expenses like gas, upkeep, and repairs on your vehicle. Alternatively, you can use the "standard mileage rate." The IRS allows you to apply a per-mile rate to your total business miles for the year. Consult your property manager or tax professional for more information about the best solution for you.
Long Distance Travel is also something to take into consideration when it comes to tax write-offs. For this to run smoothly, it's important to document your long distance travel expenses such as airfare, hotel bills, or meals. As a private landlord, this may include expenses for attending investment seminars or consulting events.
As a landlord, you might not consider your small home office as a business expense, but it is! You do need to meet certain requirements to qualify for this write-off, but as a landlord you can typically deduct certain home office expenses like office supplies, computer supplies, filing systems, and even a portion of your rent or mortgage.
Qualified interest expenses include mortgage interest payments on loans to acquire or improve rental properties and interest on credit cards for goods or services used on rental activity are some of the main kinds of interest that a landlord can deduct from their tax bill, but also can be the biggest. You can learn more about the different kinds of interests and when to deduct them right here.
If you want more information about hiring a property manager to help you maximize your rental investment income, contact the professionals at All Inclusive Realty Group.