Rental Property: The Tax Benefits

Owning rental property comes with huge benefits: an income and tax benefits. Most people that think of rental property only think of the income they will have but don’t realize there are huge tax benefits as well. Those tax benefits are will save property owners a lot of money at the end of the year and in many cases, it helps reduce their tax bills.

At the end of each year, property owners have to account for all the money they have made. It’s something that every responsible adult does. New property owners may not look forward to it because they think of all the money they have to pay. What they haven’t discovered yet are the different things they can use as right offs and what tax benefits they will enjoy.

The Taxes and Benefits

Property owners will have to pay for the income they make from their rental properties. There is no way to get away from that. It’s one of the downsides of owning property. But many new and inexperienced property owners don’t realize their tax responsibility can be lowered with the right documentation and accounting.

It often costs property owners money to maintain their rental properties. Many of those expenses and fees that are paid are actually tax deductible. An eligible expense and/or fee that is paid by the property owner can actually lower their tax responsibility. For many, these deductions are what make properly filing taxes worthwhile.

The Deductions

Those that own property and use it as a rental income know the price they pay to have that income. Those that properly file their taxes each year are often surprised at how much they can save on their tax bill. Property owners that act responsibly can claim many deductions and enjoy a lower tax bill.

Interest Paid: If a property owner still has a mortgage on their property, the interest paid on their mortgage can be claimed as a tax write off. It’s one of the largest write offs a property owner has.

Depreciated Value: Unfortunately the cost of buying a rental property can’t be written off entirely in the first year. Fortunately for property owners, the cost of their property can be written off over the course of several years because of the depreciation value of the property.

Repairs to the Property: While there will be maintenance done to the home, repairs are tax deductible. Many of the common repairs include: gutters, windows, roofs, plumbing and repairing windows. There are many more repairs that can be made to a rental property and lower the tax bill for the owner.

Travel Expense: When a property owner has to travel to their property for any reason and at any distance, the expense is tax deductible.

Insurance Costs: A savvy property owner will insure their investment. Many of the premiums paid can be included as a taxable deduction.

There are many other taxable deductions property owners will be able to take advantage of each year. While it’s hard to imagine a lowered tax bill coming from a collection of receipts, over the course of the year, it happens. 

Aug. 7 14'

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