All over the Florida and the US landlords pay more taxes on their rental income than they have to. Why Would landlords leave money on the table? It’s simple they fail to take advantage of investment property tax savings that are tax deductions and available for rental property owners, all over Florida and the US states.
Find Great Tax Deductions for Professionals
Did you know that?
Rental real estate provides more tax benefits than almost any other investment. And often, these benefits make the difference between losing money and earning a profit on investment property.
Interest is often a landlord’s single biggest deductible expense. Examples of interest that can be deducted include mortgage interest payments on loans used to acquire or improve rental property, and interest on credit cards for goods or services used in a rental activity.
The actual cost of a house, apartment building, or other rental property is not fully deductible in the year in which you pay for it. Instead, landlords receive investment property tax savings through depreciation, which involves deducting a portion of the property’s cost over several years.
Repair costs (ordinary, necessary, and reasonable in amount) are fully deductible in the year in which they are incurred. Good examples include repainting, fixing gutters, floors or leaks, plastering, and replacing broken windows.
4. Local Travel
Local driving is deductible when it directly relates to your rental property. Examples include driving to your rental property to handle a tenant complaint, or driving to the hardware store for repair parts.
If you drive a car, SUV, van, pickup, or panel truck for rental activity, you have two options for deducting your vehicle expenses. You can:
- deduct your actual expenses (gasoline, upkeep, repairs, etc., ) or
- use the standard mileage rate (see 2011 IRS rates). To qualify for this deduction you must use the standard mileage method the first year you use a car for business activity. You cannot use this rate if you have claimed accelerated depreciation deductions in prior years or have taken a Section 179 deduction for the vehicle.
5. Long Distance Travel
If your rental activity requires overnight travel, you can deduct your airfare, hotel bills, meals and other directly related expenses.
However, IRS auditors closely scrutinize deductions for overnight travel — and many taxpayers get caught claiming deductions without proper records to back them up. To stay within the law you must properly document your travel expenses.
6. Home Office
Provided you meet certain minimal requirements, landlords may deduct their home office expenses from their taxable income. This applies not only to the space devoted to office work, but also to a workshop or any other home workspace used for your rental business. Homeowners and renters can qualify for this tax savings.
7. Employees and Independent Contractors
Whenever you hire someone to perform services related to your rental activity, you can deduct their wages as an investment property expense. It can include employees such as a resident manager, or independent contractors such as repair specialists.
8. Casualty and Theft Losses
If your investment property is damaged or destroyed as a result of a sudden event like a fire or flood (a casualty loss), you may be able to obtain a tax deduction for all or part of your loss. Generally, you won’t be able to deduct the entire cost though. How much you may deduct depends upon how much of your property was destroyed and whether the loss was covered by insurance. Theft loss claims may be similarly judged.
You can deduct the premiums you pay for almost any insurance for your investment property. This includes fire, theft, and flood insurance, as well as landlord liability insurance. If you have employees, you can deduct the cost of their health and workers’ compensation insurances.
10. Legal and Professional Services
Finally, you can take tax savings on fees you pay to attorneys, accountants, property management companies, real estate investment advisors, and other professionals as long as the work is related to your investment properties. These fees can be deducted as operating expenses. Find Great Tax Deductions for Professionals
–Article excerpted from “Top Ten Tax Deductions for Landlords,” by Stephen Fishman, J.D. onwww.nolo.com. Read the original article here.