Property Management Education

The Top 6 Tax Deductions for Landlords

Landlords and real estate investors are eligible for several great tax advantages offered by the IRS. However, investment property owners are often unaware of some of the benefits available to them. In this post, we will cover the top 6 tax deductions for landlords to claim come tax season.

6. Repairs
Any repair you make to your investment property is a tax deduction. However, we strongly recommend consulting with your tax professional when it comes time to write off any capital expenses. For example, if you replaced the roof on your rental property, you must amortize this expense. There is a dollar amount threshold in place that a tax expert will be able to further advise on.

5. Insurance
Every dollar you spend on insuring your investment is deductible. You are able to write off casualty insurance, umbrella policies, etc. tied to your rental property. This is a major tax advantage you don’t want to miss out on as insurance is an unavoidable expense you will always be responsible for.

4. Property Management Fees
If you have a third party property management company handling the operational aspect of your rental property, you can write off all of the expenses you pay to your property management firm when it comes time to file your taxes. Leasing fees, property management fees, and any other fees you incur with your property manager can be written off as a business expense. 

3. Travel Expenses
The IRS allows you to write off any travel expenses associated with your rental property. If you visit your out-of-state investment, you can deduct these costs. If your property is local, you can write off the miles accrued traveling to and from your investment property. One of our owner clients hired us to be their property manager for their Commerce City investment home, and when this client travels back to Denver to view the property, most of those travel expenses are deductible.

2. Utilities
If your property sits vacant, you should be writing off any utility expenses paid on your rental property. Water, gas, and electric bills are all costs that can be written off as a business expense of owning and operating an investment property.

1. Depreciation
The absolute most important deduction to be sure you are taking advantage of as a landlord is depreciation! Again, we recommend seeking advice from a tax professional when claiming depreciation expenses on your rental property. Though we know that real estate generally appreciates in value, the IRS allows you to "depreciate the property", knowing the property will wear out over time. Just keep in mind that when it comes time to sell, the depreciation write-offs must be accounted for.

How can Westminster or Broomfield investment property owners, for example, take advantage of these key tax benefits? By calling Grace Property Management at 303-255-1990, our team can help walk you through the steps necessary to make sure you’re getting the most out of your rental investment.

Be sure to use a professional tax accountant to ensure you are in compliance with IRS guidelines.

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