Rental properties are becoming one of the rising options for people who cannot either afford a home amidst fluctuating home prices in most real estate markets, or those who choose to wait until the ripe time comes for a healthier real estate industry condition. Whatever purpose rental homes serve, the landlords are the actual ones affected by compounded responsibilities. One of the main concerns for landlords is having to pay for multiple taxes.
A thing most landlords forget in assessing taxes to be paid for is their deductibles. And this unfortunate event is caused by non-information of the available tax deductions they could actually take advantage of. It is little known fact that rental properties are the real estate investments that could be rewarded with many tax benefits.
Tax deductions for landlords and owners of rental properties could be constituted of just about any expense regarded for the improvement, management and conservation of the properties. Just like any other owners claim for their respective businesses, landlords must always remember to treat their properties as commodities that offer services to many consumers that are tenants in this case. Here are some top tax deductions landlords should take note of in filing tax statements:
These expenses could be one of the major tax deductions a landlord could claim. Landlords should take note of the interest payments they take out for all their rental properties. Payments on interests for mortgage, loans and credit cards are only a few of the common examples landlords could include as tax deductibles. However, the payments should all be proven utilized for the improvement of the rental property or employing a rental activity.
Property repairs and improvements
Rental properties are usually susceptible to frequent repairs as tenants vary regularly, especially for short-term contracts. In any case, the landlords could list down all the repairs and improvements done for the rental home. These are fully deductible in the fiscal year the repairs have been doled out. Some of the major repairs feasible for tax deductions are repainting jobs, fixing interiors like walls or insulation boards, refurbishing pipes, leaks, gutters, floors, replacement of broken windows, doors and fixtures, maintenance of landscaping and other utilities.
Depreciation of property and items in it
The actual cost of the rental property of any type – a home or apartment building, could not be deducted in the year this has been currently paid for. On the other hand, the deductions could be in the form of the depreciated value of the property; wherein a portion of the property cost could be deducted as it has been in the landlord’s full ownership over several years.
The landlord could also deduct the costs of the furniture and fixtures in depreciated value, included in the rental property. These may include washing machines, gas range or oven, refrigerators, among others.
Travel expenses with regards to rental activity
It may seem an “over claim” if landlords even include these. However, landlords are actually entitled to claim such because these are part of expenses delegated for the business. Especially for landlords who are away from the rental properties, these could entail many tax deductions. If the landlord’s vehicle, of any type, model or size, there are ways to deduct vehicle expenses vis-à-vis rental activity, like going to rental property as some complaints need to be settled.
Here are the options:
Deduct actual expenses for the travel – gasoline, maintenance and repairs for the vehicle.
Use the standard mileage rate. The rates are: 55 cents per mile for 2009; 58.5 cents per mile for July 1, 2008 to the end of 2008; 50.5 cents per mile from the start of 2008 to June 30, 2008. To be able to qualify for this method, the landlord must use this method immediately the vehicle has been used for the rental business activities. This method could not be used when there is already an existing claim for accelerated depreciation deductions or Section 179 deduction for the vehicle.
Other expenses like hotel bills, airfare, meals and other travel costs going to long distance rental properties could be considered as tax deductibles. Proper paperwork must accompany authenticity of these expenses like receipts or bill statements.
Other expenses that are deductibles are compensations for employees, contractors and legal services, office maintenance, insurance payments, losses due to casualty and theft. All these expenses could be deducted from taxes as long as these are acquired for the rental property services and activities, along with proper certifications.