Key Tax Deductions:
Tax season gets every tax payer up and on their feet—they look forward to tax breaks they can take advantage of as well as keep an eye on possible deductions.
These tax breaks for landlords is present to help their business save more and minimize the amount of their tax bill. There’s a fine line between losing a lot of money and earning profit when it comes to rental properties—understanding tax breaks is vital for landlords in order to keep as much amount of their profit as possible.
Without better understanding and knowledge on how tax breaks affect their cash flow and all possible deductions, landlords tend to pay more than they are required to which then depletes the amount of money they could have saved.
We’re no tax experts but here are surefire ways landlords can decrease their tax bill annually and take as much advantage over all possible deductions.
Depreciation. Depreciation is conducted to deduct the costs of improving (or buying) a rental property. improvements such as installation of heating and air conditioning systems, roof replacement, and the likes are among the many possible improvements deducted.
For the tenants who don’t know and those who plan on getting in the business, landlords get back the value of their property through depreciation.
Repairs. Property repairs can be costly, landlords know how much money it can flush down the drain. Sure some repairs don’t actually amount that much however, there are other that are just expensive; add up all the costs at the end of the year or come tax time, only then you’ll realize how much it is added up.
Good news landlords: repairs that are done to keep the property in its good condition can be deducted from labor costs down to fees for rental equipment.
Maintenance. For those who don’t know, maintenance work is also tax-deductible. This shouldn’t be mistaken with repairs though, maintenance pertains to activities that doesn’t involve any fixing. Example of maintenance works are pool cleaning, replacement of light bulbs, and even HOA fees among others.
Utilities. Similarly with maintenance and repairs, the cost of utilities you pay for such as electricity, gas, water and sewer, and even garbage and recycling, can be deducted as well.
Casualty and theft occurrences. Unexpected events such as flood, fire, or any other natural disasters, you may be entitled for casualty losses, a deduction to cover for everything or a portion of your property’s loss.
Albeit whole deduction cost of a damaged property rarely obtains, the possible deduction varies on whether the damaged portion is covered by your insurance and its cost.
Professional services. We know how costly seeking the help of a professional can get. To those who don’t know yet, you can deduct service fees you pay for tax accountants, attorneys, real estate advisors, and other professionals. So long as the fees paid for are for work-related services, feel free to deduct them.
Travel expenses. Traveling to and from your rental property that is hundreds of miles away from where you reside is a pain, we know. Regardless if it’s out of town or the country, the travel expense (gas, toll fees, etc.) is costly.
Often times you’ll have to travel to check on your property, tenants, collect payments, or even just as simple as putting up a “For Rent” sign. Given that you’re traveling for business, you may deduct these expenses. Just keep your receipts for deductions.
Insurance. If you have employees whom you cover health and workers’ compensation insurance, as well as fire, theft, flood, and the likes for rental property insurance, you may obtain these as deductions.
Of course, before you claim any of these deductions, make sure that you have all the required documentation and records. If you’re unsure whether or not you’re listing down incomplete or non claimable deductions, seek the help of a professional.
About Chie Suarez
Chie is a daytime writer for Depreciator – Tax-Depreciation Schedule, a company dedicated completely to Tax Depreciation Schedules that aids the Australian property market.