Apr 202011

Image by the justified sinner via Flickr

For all landlords who are contemplating renting their property to prospective tenants, there can be specific tax incentives involved. Many potential landlords think that the only benefit to renting is the rent itself, but that’s a misnomer. Substantial tax write-offs can be an even better reason for investing in rental property. Items that can legitimately be claimed on a landlord’s tax return are:

[1.] Property improvements

Although normally a landlord cannot deduct property improvements all in a single year, it is possible to take depreciation and recover those improvement costs over a period of 27.5 of those property rental years. In addition, though, some of those home improvement costs could be technically earmarked as simply rental property repairs, and they may be written off during the year that the improvements or repairs are performed.

[2.] Credit Card interest

If a credit card is utilized to pay for repairs or services provided for any tenant, the interest charged is a deductible item.

[3.] Landlord’s home office

A landlord can deduct any expenses related to a home office, based upon a percentage of the home used as a home office.

[4.] Expenses for local business travel

Local business travel includes driving to a rental property for repairs, improvements or simply responding to a tenant complaint, as well as travel to and from stores for the purpose of purchasing supplies. The auto or truck used for these activities can be written off via one of the following means –

A. Real costs such as automobile repairs and fuel.
B. The flat allowable cost per each deductible mile of 58.5¢. This rate should not be used, however, if business expenditure depreciation was previously claimed for that tax year.

[5.] Theft or Casualty Loss

If rental property has been destroyed or damaged, the total loss minus any insurance coverage may be claimed as a deduction.

[6.] Travelling long distances

With appropriate record-keeping, this includes hotel, meals, airfare for business related to being a landlord.

[7.] Do not rent to friends or family

A landlord could lose all possible tax deductions by renting to friends or family members.

Mr. Washa had only $15 to his name when he came to America in the late 1960’s, he is now an accomplished building superintendent in the city of Los Angeles.

 Posted by at 8:38 am

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