Top Ten Tax Deductions for Landlords

| Posted: 02-02-2008 | Comments: 0 | Views: 13 | Rating: (60)

(?)

No landlord would pay more than necessary for utilities or other operating expenses for a rental property. But, every year, millions of landlords pay more taxes on their rental income than they have to. Why? Because they fail to take advantage of all the tax deductions available for owners of rental property.

Rental real estate provides more tax benefits than almost any other investment. Often, these benefits make the difference between losing money and earning a profit on a rental property. But tax deductions are worthless if you don't take advantage of them. Here are the top ten tax deductions for owners of small residential rental property.

1. Interest. Interest is often a landlord's single biggest deductible expense. Common examples of interest that landlords can deduct include mortgage interest payments on loans used to acquire or improve rental property and interest on credit cards for goods or services used in a rental activity.

2. Depreciation. The actual cost of a house, apartment building, or other rental property is not fully deductible in the year in which you pay for it. Instead, landlords get back the cost of real estate through depreciation. This involves deducting a portion of the cost of the property over several years. Residential rental property must be depreciated over 27.5 years. However, if done properly, the depreciable life can be shorted to 15 or 5 years.

3. Repairs. The cost of repairs to rental property (provided the repairs are ordinary, necessary, and reasonable in amount) are fully deductible in the year in which they are incurred. Good examples of deductible repairs include repainting, fixing gutters or floors, fixing leaks, plastering, and replacing broken windows.

4. Local travel. Landlords are entitled to a tax deduction whenever they drive anywhere for their rental activity. For example, when you drive to your rental building to deal with a tenant complaint or go to the hardware store to purchase a part for a repair, you can deduct your travel expenses. If you drive a car, SUV, van, pickup, or panel truck for your rental activity (as most landlords do), you have two options for deducting your vehicle expenses: You can use the standard mileage rate or you can deduct your actual expenses (gasoline, upkeep, repairs).

5. Long Distance Travel. If you travel overnight for your rental activity, you can deduct your airfare, hotel bills, meals, and other expenses. If you plan your trip carefully, you can even mix landlord business with pleasure and still take a deduction. However, IRS auditors closely scrutinize deductions for overnight travel -- and many taxpayers get caught claiming these deductions without proper records to back them up. To stay within the law (and avoid unwanted attention from the IRS), you need to properly document your long distance travel expenses.

6. Home Office. Provided they meet certain minimal requirements, landlords may deduct their home office expenses from their taxable income. This deduction applies not only to space devoted to office work, but also to a workshop or any other home workspace you use for your rental business. This is true whether you own your home or apartment or are a renter.

7. Employees and Independent Contractors. Whenever you hire anyone to perform services for your rental activity, you can deduct their wages as a rental business expense. This is so whether the worker is an employee (for example, a resident manager) or an independent contractor (for example, a repair person).

8. Casualty and Theft Losses. If your rental property is damaged or destroyed from a sudden event like a fire or flood, you may be able to obtain a tax deduction for all or part of your loss. These types of losses are called "casualty" losses. You usually won't be able to deduct the entire cost of property damaged or destroyed by a casualty. How much you may deduct depends on how much of your property was destroyed and whether the loss was covered by insurance.

9. Insurance. You can deduct the premiums you pay for almost any insurance for your rental activity. This includes fire, theft, and flood insurance for rental property, as well as landlord liability insurance. And if you have employees, you can deduct the cost of their health and workers' compensation insurance.

10. Legal and Professional Services. Finally, you can deduct fees that you pay to attorneys, accountants, property management companies, real estate investment advisors, and other professionals. You can deduct these fees as operating expenses as long as the fees are paid for work related to your rental activity.

Warmest Regards,

Tom

Rate this Article:

Current: 0 / 5 stars - 0 vote(s).

Article Tags: Cpa, Tax Return, Tax Deduction, Wealth Strategist

Article Source: http://www.articlesbase.com/finance-articles/top-ten-tax-deductions-for-landlords-322143.html

Print article

Send to friend

Publish this Article

Author feedback

About the Author:

Tom Wheelwright is not only the founder and CEO of Provision, but he is the creative force behind Provision Wealth Strategists. In addition to his management responsibilities, Tom likes to coach clients on wealth, business, and tax strategies. Along with his frequent seminars on these strategies, Tom is an adjunct professor in the Masters of Tax program at Arizona State University. For more information, visit http://www.provisionwealth.com.com .

Submitting articles has become one of the most popular means of generating quality backlinks and targeted traffic to your website. Join us today - It's Free!

Article Comments

Add new Comment

How Much is Building and How Much is Land?
By: Tom Wheelwright | 06/02/2008 | Finance
One of the biggest tax advantages of owning a rental property is the depreciation you can take on the amount you paid for the property. Of course, the IRS understands that land does not wear out. So, only the portion of the purchase price related to the building and the contents is subject to the allowance for depreciation.

Mortgage Interest Deductions - Get your House in Order
By: Tom Wheelwright | 07/02/2008 | Finance
Many people recognize that the deduction for home mortgage interest is one of the most potent tax breaks available today. Most people are surprised at how complex and full of pitfalls the mortgage interest deduction rules really are and more are surprised about how big of a role their house plays in their wealth strategy.

Three (3) Secrets to a Successful Tax Return!
By: Tom Wheelwright | 29/02/2008 | Finance
Having the right team of advisors is critical to achieving your financial goals faster than you ever thought possible. For most people, taxes are the SINGLE BIGGEST expense. This makes finding the right tax preparer for your team extremely important.

Tax Law Changes That Impact Homeowners
By: Tom Wheelwright | 01/02/2008 | Finance
With foreclosure rates at an all time high, a new tax law was passed at the end of 2007 to help homeowners avoid unmanageable income tax debt due to income created from a foreclosure. The new law also covers mortgage renegotiations and other real estate related benefits.

Tax Law Changes That Will Impact your 2007 Tax Return
By: Tom Wheelwright | 04/02/2008 | Finance
Do you own real estate? At the very end of 2007, Congress passed a bill with several tax law changes impacting real estate. Expect some changes when you file your 2007 tax return! Here are a few highlights from the Small Business and Work Opportunity Act of 2007.

Why Hire A CPA (Certified Public Accountant)?
By: Gray Rollins | 05/02/2006 | Finance
A certified public accountant (CPA) is a professional individual who works on their own or is a part of an accounting firm.

An Honest Pay Per Click Formula Review
By: Steve Goltiao | 04/05/2007 | Internet
An honest, unbiased Pay Per Click Formula review, which teaches strategies for driving PPC traffic to CPA lead offers. PPC to CPA marketing is a little-known, but extremely lucrative business model.

Post New Year's Blues? Crack the Code to Real $$ in 2008 With "the Razor's Edge"
By: Diane Dutton | 07/01/2008 | Self Improvement
Give your 2008 results a jump start by applying these 3 important principles to your New Year's resolutions!

Got a Question? Ask.

Ask the community a question about this article:

Frequently Asked Questions

I would like to know wich ingredients using for ...
By: reptile | 12-07-2008
I would like to know wich ingredients using for making binary explosive ( Fixor )

Justin timberlake
By: michele | 08-07-2008
Is justin timberlake a left or right handed person?

Anybody knows greg? where he works ?
By: gg | 30-06-2008
gregory gee,clarksville,tn.37040

White bird poop
By: Lil | 28-06-2008
why is bird poop white? They don't white stuff that I know of.

Can anybody recommend a tax return software?
By: cleverclogs | 13-06-2008
I am a self employed hairdresser and need to find a software which will help me track my income and expenditure through the year. Can anyone recommend one?

How to improve our knowledge in the side of IT ...
By: Raja Rajeswari.S.P | 28-05-2008
How to improve our knowledge in the side of IT industry?

Q&A Powered by:

Latest Finance Articles

Why Coming Out With A Dragon Is The Ultimate Objective When Entering The Den
By: Thomas Pretty | 25/07/2008
A look at some of the success stories form the BBC's Dragon's Den and how securing investment from these entrepreneurs is akin to securing a loan from the bank.

Choosing The Best Trading Books
By: Sharon Reid | 25/07/2008
Quality trading books all have certain qualities. If you're serious about making money from trading you need to read the best trading books available.

Renting Apartment - 3 Things To Note When Renting An Apartment
By: Cheow Yu Yuan | 25/07/2008
Are you looking for a suitable apartment to rent? When renting an apartment, it is very important for you to know every single detail in the contract that you are going to sign. This is because when you sign a lease, you are signing a legal document and will be bound to the terms and conditions stated within it.

Real Estate IRA Investment Basics
By: Jerry Glynn | 25/07/2008
Article discusses the history of real estate IRAs and how investors can utilize them.

Benefits of a Bad Credit Loan
By: Tom Tessin | 25/07/2008
People who fail to keep their expenses under control often end up falling deeper into debts. For such people, the ideal solution is to avail bad credit debt consolidation loan. These people need to look for debt consolidation counseling before applying for such type of loan. People under debts often consider...

Student Loans Consolidation Service - an Easier Way to Get Through College
By: Peter Barlow | 25/07/2008
Are you dreaming of pursuing college to have a better career in the future but your means are not enough to assist you get through it? No need to worry and keep up with that dream of yours. There is a student loans consolidation service that would help you make...

You Count On Your Bank, But The Bank Count On You Even More
By: Paul Dubsky | 25/07/2008
The bank count on you more than you count on them. A run on a bank is the last thing anybody wants. Liquidity is vital. Wheels have to keep turning. Cash is King.

Bad Credit? Loans Are Still Available For You!
By: James Copper | 25/07/2008
An article giving advice on getting finance if you have a bad credit history

More from Tom Wheelwright

How Your Bookkeeping Can Boost Your Tax Deductions
By: Tom Wheelwright | 28/06/2008 | Business
One of the keys to bringing your tax strategy full circle is your bookkeeping. It's one thing to know what's deductible and how to maximize your business deductions, but unless that gets reflected in your bookkeeping, it's as if the tax planning never happened at all. Use this checklist!

Standard Mileage Rates are Increasing: Find Out How Your Home Office Can Help You Deduct Even More
By: Tom Wheelwright | 27/06/2008 | Business
With gas prices on the rise, the IRS has announced an increase in standard mileage rates effective July 1st. For business miles, the rate is increasing from 50.5 cents per mile to 58.5 cents per mile.

3 Rules to Simplify Your Recordkeeping for Business Travel
By: Tom Wheelwright | 23/06/2008 | Business
Summer is here and for many of us that means summer business trips. I love traveling for business. But, my least favorite part about business trips is keeping track of all of my receipts.

Meals & Entertainment: What is Deductible and What is Not?
By: Tom Wheelwright | 22/06/2008 | Business
Probably the most common business deductions are meals and entertainment. However, people are often confused about whether the expenses are fully deductible, partially deductible or not deductible at all.

How to Deduct Your Travel Expenses
By: Tom Wheelwright | 21/06/2008 | Business
Travel expenses are a favorite deduction of many clients, because they love to travel and especially enjoy it when the IRS is subsidizing part of the expense. In order to deduct travel expenses, however, you must show that the expense has a business purpose and is ordinary and necessary to the business.

Are Your Meals 50% Deductible or 100% Deductible?
By: Tom Wheelwright | 20/06/2008 | Business
There are several specific rules to determine if a meal is a legitimate business expense. These specific rules include meeting the business purpose requirement and the ordinary and necessary requirement. In this article, it's assumed that the meal has met these requirements and is indeed a business expense.

A Checklist to Properly Document Your Meals and Entertainment Expenses
By: Tom Wheelwright | 19/06/2008 | Business
One thing you can always count on during an audit is a request for documentation supporting meals and entertainment expenses. The IRS has found that these expenses are heavily abused and are an easy way to generate additional tax revenue, not to mention additional revenue from penalties and interest.

Entity Formation Fundamentals
By: Tom Wheelwright | 30/05/2008 | Business
One of the most important steps in any tax strategy is determining what entity should be formed to hold your businesses and investments. For legal purposes, there are four basic types of entities: sole proprietorship, partnership, corporation and limited liability company. The entity you choose should take into account both the tax effects of the entity and the legal aspects of the entity.

Article Categories

Article Marketing

Article Notepad

Stop Duplicate Content

Term Papers

Need Help?

Sign up for our email newsletter

Receive updates, enter your email below

Use of this web site constitutes acceptance of the Terms Of Use and Privacy Policy | User published content is licensed under a Creative Commons License.
Copyright © 2005-2008 Free Articles by ArticlesBase.com, All rights reserved. (1.40, 16)

Top Ten Tax Deductions for Landlords

Article Comments

Related Articles

Got a Question? Ask.

Latest Finance Articles

More from Tom Wheelwright

Need Help?

Site Links

Webmasters

Business Info

Sign up for our email newsletter