Tax Deductions for Rental Property OwnersWhile owning rental property can provide you with a long list of benefits as it pertains to income and growing equity, there can also be numerous tax deduction advantages for you as the owner of this type of investment real estate.

Here, for instance, there are a variety of current expense items that may be claimed as deductions. These costs are typically the expenses that go towards repairs, and for keeping the property in habitable condition. Current expenses may also be necessary to help you with operating your rental real estate business.

In order to be qualified as a deductible current expense, though, there are some conditions that need to be met, such as:

  • Related – First, the cost must actually be related to your rental real estate operation. In this case, for instance, you are not allowed to write off toilet seats or light switch covers that you have purchased for your own personal residence.
  • Reasonable – The cost(s) must also be considered reasonable. For example, the purchase of a toilet seat may qualify – but not if that item comes in at $600!
  • Ordinary and Necessary – The expense(s) that you claim will also need to be considered as “ordinary and necessary.” What this means is that the costs must be generally accepted and appropriate for your business. So these would oftentimes include the cost of maintaining the property, as well as the cost of interest on the mortgage (if applicable), and your marketing and advertising expenses.
  • Current – Likewise, in order to qualify as a deductible expense, your cost(s) must also be considered current. This means that they must have more short-term value as versus long-term value. In this case, for instance, if you repair the hot water heater, you would obtain short-term value (as versus replacing it, which would provide you with more long-term benefit).

Even with all of the potential tax deductions of being a landlord, this job can require a fairly large amount of your time. With that in mind, it could make sense to hand over these time-consuming duties to an experienced property manager.

For more details on the services that a professional property management team can provide, Contact Us today.