12 Tax Deductions Available to Rental Property Investors

12 Tax Deductions Available to Rental Property Investors

Oh, January – it's the time of the year for fresh starts, new resolutions, and… taxes. But if you're a rental property owner, we've got some good news - you may be eligible for some great tax deductions! In this blog post, we will discuss the top 12 tax deductions that are available to you. Remember that everyone's situation is different, so please consult with a tax professional to determine what deductions are available to you.

1. Mortgage interest: You can generally deduct the mortgage interest you pay on a loan used to buy or improve your rental property.
2. Property taxes: Property taxes paid on a rental property are generally tax deductible.
3. Depreciation: The cost of rental property (excluding the land) is considered to decline over time, and this decline in value can be deducted each year as a depreciation expense.
4. Repairs and maintenance: Expenses related to maintaining and repairing a rental property, such as painting, fixing a leaky roof, or replacing a broken window, are generally tax deductible.
5. Insurance: Insurance premiums paid for a rental property are generally tax deductible.
6. Professional fees: Fees paid to a property manager, bookkeeper, or other professionals for services related to the rental property are generally tax deductible.
7. Travel expenses: If you need to travel to your rental property for business purposes (e.g., to make repairs, meet with tenants), you may be able to deduct some of your travel expenses.
8. Operating Expenses:  Purchases made for supplies or subscriptions for managing your rental properties are tax deductible.  This can include office supplies like pens, paper, ink, legal forms, or management books.  And also subscription-based services like phone bills or web-based property management software.
9. Property Upgrades: You can spruce up your investment property by painting shutters, power washing, or doing some landscaping. Did you know that all these cosmetic improvements are also tax deductible in the current year? So why not refresh that paint, trim those shrubs, and give this space a new lease on life (see what we did there?)?
10. Advertising: Any money you spend advertising your property for rent is deductible, whether online, print, or radio.
11. If you're a landlord, your deductions have an upper limit - but luckily, it's quite generous! You can typically subtract up to $25,000 from your rental property income.
12. Keep receipts and records of payments in case the IRS has questions (and we all know they love to ask questions). Wait, you have to keep up with receipts for the entire year? That sounds like a lot. Thankfully, at Sweyer Property Management, we keep track of all rental property investment expenses and provide end-of-year statements for clients. That way, when tax time rolls around, you don’t have to go hunting for a pile of receipts.

It's important to note that to claim these deductions, you must be able to demonstrate that the expenses are directly related to your rental property and are not personal expenses. Additionally, you should keep good records of all your investment property expenses, as you will need to provide documentation to support your deductions.

In conclusion, it's worth investigating the various tax deductions available to landlords. Even though the financial responsibilities of owning a rental property can be daunting, any responsible landlord will take advantage of all the legal deductions they are allowed to make. It's important for rental property owners to consult their tax professionals as eligibility for these deductions varies from case to case. With the proper advice, landlords can work towards creating predictable cash flow and protecting their investments from overpayment of taxes. The process is ongoing and requires constant diligence, but with persistence and hard work, maximizing your profits as a landlord while reducing your tax burden is possible.

As a leading property management firm in the Cape Fear region, Sweyer Property Management recommends that property owners strongly consider working with a trusted and experienced property management company. Whether it pertains to the eviction process or another area of handling your investment properties, we want to make sure property owners and investors understand the relationship they are entering into when choosing to work with a property management firm. 

If you have investment properties and do not use a professional management company, we hope you consider doing so. The experts at Sweyer Property Management will be happy to provide you with a free rental analysis or, if you prefer, give us a call at 910-239-1338. 
 
Sweyer Property Management is a full-service professional property management company specializing in all aspects of rental management. If you're an investor or property owner looking to learn more about our services and what a professional property manager can do for you, reach out to us today at 910.256.3031 or via our website. Sweyer Property Management has exhibited continuous growth throughout the Wilmington, Leland, and Hampstead areas while maintaining an excellent Google+ rating for customer service.