Posted in Blog  
  on Sep 15, 2015

Top 4 Tax Deductions to Remember

4 Tax Deductions Landlords Often Forget to Claim

A lot of landlords feel intimidated during tax season. They want to save as much money as possible, but they do not want to make mistakes that will force them to pay hefty fines.
There are plenty of ways for landlords to save money without increasing the risk of audits. Make sure you take advantage of these four tax deductions landlords often forget to claim. They will lower your tax burden and help you build a more successful business.
1. Loan Interest
Unless you happen to have a lot of capital, you probably need to borrow money to purchase rental properties. That means you will have interest payments. Luckily, the IRS lets you take a tax deduction for the money you spend on interest.
This is an important deduction that all landlords should take when they can. If you borrow $150,000 with a 30-year mortgage that has a 4.5% interest rate, then you will eventually pay the lender over $123,000 in interest. Missing those deductions could seriously stunt your business.
2. Management Fees
Many landlords use online tools to make property and tenant management easier. Instead of spending time screening tenants and tracking down payments, they enjoy the convenience and security of letting someone else handle those jobs.
Since management fees are considered a business expense, you can deduct them from your federal taxes. Even if you only spend a few dollars a month on management services, it's worth taking the deduction.
3.Property Taxes
The money you spend on property taxes should get deducted from your business's income. It's not only a business expense, but a form of tax that you have already paid. You are not required to pay income tax on money used to pay other taxes.
Keep in mind, however, that you can only deduct the property taxes that you pay during the same year that you made income from your rental properties. In other words, when you're completing your 2015 tax forms, you will only deduct the property tax that you actually paid in 2015.
This is sometimes confusing to people who pay their 2015 property taxes in 2016. If you do not make the tax payment until 2016, then you can only include the property tax deduction on your 2016 tax return.
4. Office Expenses
Practically everything that you use in your office is considered a business expense. Some common expenses you should deduct include:

  • Printer ink
  • Paper
  • Pens
  • Computer software

You can also take deductions for any decorations that you put in your office, including artwork and plants.
If you rent an office, you can deduct that expense from your taxes. If you run your rental business from a home office, then you can take the simplified deduction that gives you about $5 per square foot (up to 300 square feet) or the regular deduction that considers how much money you spent on utilities, mortgage interest, and taxes.
The simplified home office deduction is fairly new, so a lot of people miss this when doing their taxes. Depending on your specific circumstances, you could actually get a bigger deduction by using the simplified method.
It's always a smart idea to keep track of your expenses so you can prove to the IRS that your deductions are legitimate. If you haven't started saving invoices and receipts yet, today is the right time to start.



The Landlord Tenant Board: What it is and When it is Needed

Many times, there are issues between a landlord and a tenant that need to be resolved but are failed to do so, because both parties have gone too far with their actions, and have retaliated in the... More

How to Create a Residential Lease Agreement

Where there is a landlord, there will also be a tenant, and it is no surprise that these two parties can only work together once there is some sort of agreement, contract or a binding deal in place.... More

The Best Sites for Rental and Lease Agreement Templates

Many landlords find it difficult to write and draft a lease agreement. Since every State has its own general template, it can also be difficult to make sure your lease agreement meets all the criteria... More

5 Landlord Forms that Every Landlord Should Have

When it comes to being a landlord, one should know that it is not for the unprepared individual. This should be clear that being a landlord does not simply mean that you will be taking the rent and... More

Landlord Obligations: The Responsibilities of a Landlord

Becoming a landlord is a major deal and no one can simply get up and think, “well, yes I think I should be a landlord and rent out my flat.” If you are thinking that you would like to be a landlord,... More

The Best Landlord Associations for Landlords to Join

If you’re a landlord and want to manage your business in a better way, you should endeavor to get in touch with those industry experts who have the experience and the skills to help you do it. This is... More

The Best Landlord Forums

Landlords and aspiring landlords, do not become as such, without guidance and advice. There is a lot that goes into being a landlord nowadays; in fact, there is so much to learn that it often confuses... More

The Biggest Landlord Problems and How to Fix Them

Renting out an apartment or a house can become a constant revenue source for landlords, but at the same time, it gives rise to several problems. It is a fact that high standards, a strict lease... More

Landlord Tenant Disputes

If you are currently thinking of becoming a landlord only because it helps you have a constant stream of income, you should think twice. It’s not that you should not consider offering your property... More

Unpaid Rent

When you talk about the most common disputes arising between landlords and tenants, nonpayment of rent has to be there in the list. People rent their properties to earn money, and when a tenant... More