Landlord Tips for Tax Season

It’s tax season, so what better time to review your tax information to determine which deductions you’re eligible for? Owning your own business and property is a wonderful thing, but it also comes with numerous responsibilities. Taxes are part of the deal, but that doesn’t mean you have to get caught in a never-ending loop of paying out the nose. There are many benefits to being a landlord, and we’ll go over a few of them here. A note: we are not CPAs, and we recommend reviewing your own taxes closely with a tax professional to determine the deductions that will work best for you. This is intended as an overview to give you a few examples of your options.

Are Landlords Eligible for a Deductible?

Most independent business owners know that current expenses related to their business can become deductions if purchased during the tax year. This applies to landlords too! The key factors are that it must be an ordinary and necessary purchase (repairs don’t count), must be directly related to your business (rentals, in this case), and should be for a reasonable amount (the expected amount for the item). Additionally, you can count other necessary costs like utilities and insurance as a current expense, as well. Double-check with a tax professional!

Did you spend hundreds or thousands of dollars on expenses that improved the value of your property? Those might count as capital expenses. Make sure that the update counts as an “improvement,” not a “repair.”

Now for some more specifics about the exact sort of deductions you can consider! We mentioned utilities and insurance above. In addition, you may be able to deduct maintenance, repairs, management fees, travel expenses, legal and professional fees, office or operating costs, vehicles used for work, advertising, depreciation of assets, and more. Itemized lists are always best! Make sure to keep good records of everything from rental background to replaced items in each unit. These items can add up, but the biggest deductions you’ll likely find will come from your loan interest and property taxes.

One last thing: in many areas, you are eligible to claim up to $25,000 in losses. If you’ve had a particularly rough year or had to make major repairs that cost you profit, talk to your CPA about claiming losses.

We hope these landlord tips help you out this tax season. In addition to our advice posts, we also offer a number of very helpful screening packages for new and experienced landlords. Depending on your needs and number of rentable units, we may need to perform an on-site inspection to confirm a separate home office, locking file cabinet for properly storing applicants’ report information, and an acceptance of terms of 25-page agreement for service. These packages will offer you all the peace of mind you need, whether you opt for a mini or full credit check for your tenants. For more information, please contact us anytime!

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