Rental Property Tax Deductions
Owning rental property is a significant investment, but it also has its share of responsibilities — especially when managing taxes. Understanding which expenses you can remove can significantly affect the overall profitability of your real estate company. By taking full advantage of tax deductions, you can minimize liability and keep more of your hard-earned income. Here are the key tax deductions available for rental property owners:
Maintenance and Repairs
These are the costs of keeping your property in good condition, such as fixing a leaky roof, replacing broken windows or repairing damaged appliances. The IRS allows you to deduct these expenses as long as they are considered ordinary, necessary and reasonable. To prove the tax deductions for your rental property maintenance, you must keep detailed records of all repairs, including receipts and invoices.
Insurance Premiums
Insurance is essential for protecting your investment. Fortunately, the premiums you pay for rental property insurance are fully deductible, including fire, theft, flood and landlord liability insurance coverage. If you have people working on your property, you can subtract the premiums for workers’ compensation and health insurance. These deductions can add up, offering you significant savings over time.
Employee and Contractor Expenses
If you hire workers to help manage your rental property, the costs associated with their services can be deducted from your taxes. These include wages, salaries, employee benefits and payments made to contractors for property management, landscaping and cleaning. Keeping detailed payroll records is crucial to ensure you can back up these deductions if ever questioned by the IRS.
Travel and Transportation
The expenses that add up when you’re driving to your rental property for an inspection, meeting with tenants or purchasing supplies can be subtracted from your taxes. The IRS allows you to subtract costs like gas, maintenance and tolls. Travel-related expenses — including airfare, hotel stays and meals — can also be deducted if your rental property is out of state. Remember, these expenses must be directly related to your business activity to qualify.
Legal and Professional Services
Any fees for legal and professional services directly related to your rental property are deductible, including fees paid to attorneys for lease agreements, accountants for tax preparation and property management firms. These help offset the costs of ensuring your rental property is managed effectively and in compliance with the law.
Work With the Professionals
At Marshall Jones, we provide tax planning and preparation services to ensure your business is tax compliant. Let us help you save time, refocus your resources and improve your operations. Contact us today to learn how we can help you navigate your real estate tax deductions.
