As an investment property owner, you are likely well aware that you are allowed to deduct various rental property expenses on your tax return. These costs will typically include the interest you pay on the property’s mortgage (if applicable), as well as the cost of maintenance, insurance, and depreciation.
But, while many landlords rent space that is separate from their personal residence, what about available tax deductions for those who rent a room (or rooms) in their personal home or other property that is considered to be their residence?
In this case, you may still take certain tax deductions. However, there are some limitations that may apply. For example, first, you will need to determine whether or not the property is even considered to be your personal residence.
Here, according to the IRS, you are considered to use a dwelling as a residence if you use it for personal purposes during the tax year for more than the greater of the following:
- 14 days, or
- 10 percent of the total days that you rent it to others at a fair rental price.
If your property falls into this category, and you use it for both personal and rental purposes, then it will typically be required that you divide your total expenses between each, based upon the number of days that the property is used for each of these purposes. For example, if you rent the property for 30 days out of the year, then you can deduct 1/12th of the expenses.
Regardless of the type of property you use as rental units, being a landlord can be time consuming. So, if you just simply do not have the time to devote to this task – or you would prefer to use your time in other ways – then it may be wise to consider hiring a property manager.
If you own rental property in Orlando or the surrounding Central Florida area, then give us a call and we’ll provide you with more details.