When it comes to paying taxes, most individuals have no idea that they may be paying so much without needing to do so. The same goes for landlords. Why should you or any other landlord be paying more for the utilities or operating expenses for the specific rental space? Along with doing other things, a landlord can always take certain steps to enjoy tax deductions.
Many landlords often make a mistake of paying taxes higher than what they should be paying in their business. Why—all because they have failed to take advantage of and utilize the tax deductions that have been put in place to empower the landlord in the first place. At least now, you can be free of paying the “extra bucks” and save up on these tax payments.
The first type of tax deduction is in the form of Interest. This is probably the biggest expense a property owner has to face. Examples of deductible interest are mortgage interest payments on loans or interest on credit cards used for the purchase of a property.
The second deductible expense is that of depreciation. The actual cost of the rental space is not deductible within the year that you pay for it. Instead, landlords get the cost back through the process of depreciation. This works when you deduct a part of the cost of the property over many years. The third type of deductible tax is that of repairs. Any cost of the repairs to the property is fully deductible in the year in which they may have occurred. These include repainting, repairing of the gutters, replacing any broken windows and plastering.
The fourth kind of deductible expense would be that of local travel. Landlords are allowed to enjoy some discount when and if they travel for any rental activity. Therefore, if you go to the rental property to deal with a tenants’ complaint or to the hardware store to purchase something for the repair, you can deduct the amount you spent on travel from the tax.
In addition, you can deduct certain amount from your tax payments if you have to arrange a long distance travel for rental activities. This means that any travel made to the rental space that includes air travel or otherwise, hotel bills, meals and any other legally acceptable activity can warrant a deduction. The sixth kind of deduction can be that of the Home Office. It means that if a landlord conducts their business from home and then meet certain requirements, they could well be a candidate for tax deductions. This is also true for if you own the property or are a renter yourself.
The seventh kind of deduction is available for employees or private contractors. If you hire someone to do all the rental activities for you or the repairs for example, you can deduct their wages as part of the rental business expense. Moreover, if your property has been damaged, you can deduct the damage done. And finally, any fee you pay for professional services can win you some tax deductions. So, double check your circumstances and see if you fall in any of these categories to be able to enjoy some tax deductions.