Landlord Tax Deductions

Overview

If you are a landlord, you should keep records of your rental income, which you must report on your tax returns every year. Even though you must pay taxes on your rental income, there are opportunities for you to save through tax deductions.

Without a thorough understanding of the tax deductions available to landlords, you could end up overpaying on your taxes. As a landlord, you should take advantage of available tax deductions to maximize your profits on your rental property income.

If you are a landlord, you should think about your rental property in terms of a business. In general, you are able to deduct the expenses of maintaining, servicing, and managing your property.

Along these lines, the IRS allows landlords to save on certain expenses for management, advertising, utilities, and yard maintenance. Expenses are eligible if they are ordinary and necessary for the rental property.

Make sure that you pay close attention to what is an eligible expense and what is not. Keep track of your receipts, checks, and bank statements that show transactions.

Vacant Properties

You can deduct expenses even when you do not have a tenant. In fact, you can deduct advertising fees, repairs, cleaning, property taxes, and insurance costs, so make sure that you keep detailed records of your expenses.

Loan Interest

As a landlord, you can deduct the mortgage interest on your rental property. The interest can be from loans that you used to buy the property or fund renovations and improvements. You may also be able to deduct interest from credit cards that you used to fund rental property expenses.

Depreciation

If your rental property loses value, you may be able to deduct your losses. You may want to work with a certified public accountant (CPA) or financial advisor to deduct a part of your rental property cost.

Maintenance

Your regular maintenance and repair fees are tax deductible. These fees can include landscaping, plumbing, cleaning, pest control trash removal, and equipment rental. For a complete list of eligible maintenance expenses, you should consider consulting a tax advisor.

Business Expenses

There are many business costs associated with being a landlord. You may pay advertising fees, and you may need to maintain a home office. You may also need to travel from property to property or hire a property management firm to assist you. If you need to travel out of state to maintain your rental property, you should realize that your travel expenses are deductible. You can deduct the entire cost of transportation. You might incur expenses and losses due to damage and theft, and you may pay for an insurance plan to protect your renters, property, and business. All of these expenses are tax deductible.

Professional Services

As a landlord, you can't do everything alone, and you might need the help of a person with a certain specialty. Lawyers, advisors, and contractors are all important resources for landlords. If you consult with professional service firms, you may be able to write off the expenses. Keep in mind that your expenses must be ordinary and necessary to qualify.