Landlords incur a lot of expenses when managing rental properties. Knowing which expenses can count as tax deductions for your business can help you minimize your taxes and maintain your profits. You should also consider both state and federal tax policies. For example, fresno property management rentals will have different tax obligations from a landlord in a different state. For this reason, one of the first expenses you can claim as a deduction is the expense of a tax consultant. Hiring a tax professional is a good way to ensure you maximize your state and federal deductions. You can deduct plenty of other costs, too. These are some of the best options for deductions on your federal taxes.
Staff expenses
One of your primary expenses may include paying a property manager to oversee your rental properties. The cost of the manager’s salary can be used as a tax deduction. Larger properties may also hire maintenance staff, and their salaries also qualify as a tax deduction. Other staff costs may include hiring an administrative assistant and a bookkeeper, who can maintain financial records and store expenses in folders for tax returns to ensure that you don’t miss out on deductions.
Services
Landlords who hire maintenance staff may still need to bring in contractors to perform tasks, such as fixing a boiler or replacing pipes. Expenses incurred from hiring plumbers, painters, electricians, landscapers and groundskeepers can all be claimed on your taxes. Landlords who haven’t hired a bookkeeper can contract one. It’s also an option to hire a property management company instead of having a staff person who oversees your property. You can also claim the cost of any tradespeople, bookkeeping contractors, and property management companies you hire when you file your taxes.
Financial expenses
All property owners pay property taxes. You may also be paying for a mortgage on your rental property. The cost of property taxes and the cost of interest on your mortgage are expenses you can claim as tax deductions when you file. You can also claim your insurance costs and the cost of utilities when you file your taxes. Landlords can also write off any travel costs associated with managing their property. This can include part or all of meal costs, depending on the reason for the expense. Other costs, such as advertising vacancies and performing credit checks on potential tenants, can also be claimed against your taxes.
Replacement costs
Landlords who rent to tenants may provide appliances for their tenants’ use. In the event that a dryer, fridge or stove needs to be replaced, you can write off the expense of the replacement. It’s important to note that landlords can’t write off the costs of improvements. In the event that you decide to install dishwashers in all of your rental units you may not be able to deduct that expense; however, once installed, the cost of repairing or replacing the dishwasher would be a tax deduction.
Supplies
Landlords have to buy a lot of supplies for their properties and staff. These supplies include everything from the folders your bookkeeper stores tax deductible expenses in to the phone your leasing agent uses to place and receive calls. Office and maintenance supplies are examples of the types of supplies that you can claim against your taxes. Other items that you can claim include tablets, computers, tools, and vacuum cleaners.
Losses
Landlords may also face financial losses when operating rental property. One type of loss is loss from theft. If items you own are stolen from your property, you can claim those costs on your taxes. Another type of loss that landlords can claim is depreciation. Over time, properties can lose value. As buildings age, it’s common for the value to decline. Landlords can claim these types of losses on their taxes. Losses through depreciation can be used to offset the costs of improvements, which are not normally tax deductible.