If you’re a Florida investment property owner and you’re preparing to file your taxes for 2020, it is important to know where you may be able to get some relief in the form of deductions and/or tax credits.
Before moving forward, though, you must first consider what type of investor you are. For example, if you spend most of your working hours (i.e., more than half) in your investment property business, you are considered a real estate professional – and in this case, any losses that you incur are not deemed as passive.
This means that you may fully deduct losses against the property-related income that you receive. If, however, your rental property endeavors are more of a side business, then any loss that you incur could be deductible up to $25,000 against the income from your rentals.
Some of the more common deductions that investment property owners may be eligible for include:
- Mortgage interest. If you have a mortgage on your property(ies), the IRS allows up to $750,000 in interest on new loans.
- Travel expenses. If you drive to and from your investment properties to collect rent, your mileage could qualify as a deduction.
- Lawn care / maintenance. Interior and/or exterior maintenance may qualify for tax deductions, as well as the cost of repairs.
- Losses from various causalities. You may also be allowed to receive a deduction resulting from theft and/or damage due to a natural disaster, such as a flood or hurricane.
Sorting out what is and isn’t deductible can be somewhat challenging. That’s why it can be beneficial to work with a property management team that is also well-versed in the U.S. tax code.
If you own rental property in Orlando and/or the surrounding Central Florida area, give us a call and let’s discuss how we can make your life easier.
Tax Deductions for Rental Property Owners. Investopedia. December 16, 2020. https://investopedia.com/articles/pf/06/rentalowner.asp