Ten Tax Deductions Property Owners Need To Utilize
1) Interest from Your Home Loan
If you are still paying the mortgage on your rental property, there is a good chance you can deduct the interest from your taxes.
2) Depreciation of Assets
In western North Carolina, you typically think of your property as consistently increasing in value; however, there are a few ways to take advantage of asset depreciation deductions. Structures, renovations and improvements, and some equipment will depreciate over time. Make sure your tax preparer knows about your potentially depreciating assets.
3) Property Taxes
In many cases, real estate property taxes are paid through your mortgage company. If you have fully paid the mortgage on your rental property, you likely fit the property tax bill yourself. For landlords paying their own real estate taxes, you may indeed be able to deduct them from your IRS tax bill.
4) Insurance Premiums
If you are paying anything that would be considered business-related insurance, it may be deductible. To help you determine whether or not insurance on your rental property would be considered tax-deductible, answer this question: If this property was not for rent, would I have this insurance? If the answer is "no," then you should ask your tax preparer whether it might qualify for a deduction.
5) Utilities (if you pay for them)
If you pay the utilities for a rental property, you can deduct those as expenses. This deduction is available even if the tenant reimburses you; however, you do need to remember to claim whatever the tenant pays as income.
6) Travel Expenses Related to the Property
Whether you are local or live a considerable distance from your rental property, what you spend traveling to it for business-related reasons can likely be deducted from what you owe. Make sure you are keeping up with your travel expenses, including airline tickets, bus fare, and, of course, vehicle mileage. For vehicle mileage specifically, follow these steps:
- Keep a notebook or log inside your vehicle or electronically
- Write down your mileage when you begin to drive to your property
- Write down your mileage when you arrive
- Write down your mileage when you return
- Log the total number of miles driven for business reasons to your property
- Consider downloading a mileage tracking phone application
7) Lawyer and Accountant Fees
Professional services can be considered tax-deductible. While "professional services" may seem broad, it can certainly include legal fees, accounting, and other costs you have incurred to ensure your property is available to be leased.
8) Repairs and Maintenance
Repairs and maintenance costs are two of your key deductions. Here is a short summary of what would be considered repairs or maintenance:
- Replacing or repairing an HVAC system
- Heating and air conditioning maintenance (cleaning condenser coils, replacing filters, etc.)
- Roof replacement or repair
- Plumbing pipes and system repair
- Erosion control and drainage improvements
- Ongoing lawn and landscape maintenance (assuming the tenant does not pay for it)
- Water damage repair and mold remediation
- Pest extermination and wildlife management
- Pressure washing
Do you advertise your property to help fill vacancies? If so, whatever you spend advertising is likely tax-deductible. Whether you pay to have your property included in a directory, spend money for boosted posts on social media, or put ads in newspapers, make sure you keep up with receipts and utilize advertising deductions.
10) Property Management
Property management services can be tax-deductible. Furthermore, property management companies do a lot of the tasks listed above. With Asheville Phoenix Properties, the cost of property management is often a wash for owners once you factor in the price of your time, our ability to analyze the market to set the right rental price, and our commitment to reducing vacancy time. Of course, we will keep up with all the costs you have incurred in a given year, so you do not have to worry about missing a potential deduction.
If you are ready to consider trusting the management of your Asheville area property to professionals, you will not find a team with more experience and expertise than Asheville Phoenix Properties. We would be happy to answer your questions about how you can benefit from professional property management services. Contact us to find out more about how we can help you during tax season and throughout the year.