Today I’m going to reveal seven tax breaks that could help you make more money from your current real estate investments. If you are a seasoned property owner, then you are probably already taking advantage of these tactics, but I guarantee you aren’t utilizing all of them.
Tax Break 1: Interest
Just like with your personal property, you can deduct interest paid on loans used to purchase your property.
The same goes with credit card interest. Be sure to deduct interest paid on credit cards for any purchases related to the maintenance and upkeep of your rental property.
Tax Break 2: Advertising Costs
This is probably the most commonly missed tax break: advertising costs.
Be sure to deduct and expenses you incur related to filling a vacant rental property.
Tax Break 3: Maintenance & Upkeep
Owning a rental property technically makes you rental business.
Make sure you are deducting common expenses like HOA fees, trash removal, landscaping, necessary repairs, and any maintenance expenses.
Tax Break 4: Property Management Fees
If you use a property manager to keep an eye on your investment, make sure you deduct their management fees from your taxes. His or her fees are fully tax deductible.
Tax Break 5: Depreciation
Your property and the systems inside of it (heating & air, electric, etc…) will depreciate over time. Don’t miss out on this tax deduction.
To figure out the yearly deduction for a typical single-family rental home, you divide the total value of a rental property by 27.5 years.
Tax Break 6: Professional Services
There are many professional services you utilize as a rental property owner.
Make sure you have a deduction for each of the following:
- Broker commissions
- Accounting fees
- Legal expenses
- Property management fees
- Other professional fees
Tax Break 7: Insurance Premiums
Landlord insurance will generally run you 15 to 25 percent more than your typical homeowner’s insurance.
Make sure you are accounting for insurance premiums in your tax deductions.
See IRS Publication 527 for more information about landlord tax deductions, and consult your accountant for advice specific to your property.