To help out, we decided to give rental property owners a list of deductions that might make sense for you to save on your upcoming tax bill, but you only have until the end of the year. Now is the time to start gathering those receipts and making any other end-of-the-year expenses.
Disclaimer: Please consult with your CPA prior to making serious financial decisions before the end of the year.
1) Loan Interest/Points. If there is a mortgage on any of your properties, the interest might be your largest deductible expense.
2) Depreciation of Assets. Generally speaking, this involves the value of a structure (not land), value of improvements, and equipment.
3) Taxes. This includes any property taxes, employee taxes and permit fees/inspection fees.
4) Repairs. This is defined as any effort to maintain the current condition of a property or asset and includes painting, plumbing, A/C, fixtures, incidentals, etc.
5) Maintenance. Often confused with repairs, maintenance expenses are those in which there is nothing to be fixed, only maintained such as lawn, pest control, HOA's, landscaping, etc.
6) Insurance Premiums.
8) Travel Expenses. Don't forget to save those receipts of any long-distance traveling to your properties, including airline fares, car rentals, hotels and 50% of meal expenses.
9) Management Fees. If you hire a property management company, it is deductible.
10) Legal and Professional Fees. This includes a lawyer, accountant or other tax professional.
There are several ways to take advantage of tax write-offs, but now is the time to act!
Happy New Year!