If you own rental property, you may qualify to take a number of additional deductions specifically, for landlords. In our new deduction of the week entry we decided to take a look at some of these rental property deductions.
Interest
As a landlord you will pay a decent amount of money in interest. Fortunately, many of these expenses can be deducted on your tax return including mortgage interest, loans to improve the property, and credit card interest on goods or services used in your property management.
Travel Expenses
If you have to travel to maintain your rental, collect rent, or show off the property, then you can deduct these expenses. You have the option to either deduct the actual expenses - which can be especially useful if you must travel by plane and stay in a hotel - or take the IRS' standard mileage rate for any miles driven.
Home Office
If you have a home office that you use to run your property management business then you may be eligible to claim the home office deduction. However, in order to qualify as a home office in the eyes of the IRS the room must meet certain specifications.
Employees, Independent Contractors, and Professionals
Any wages paid to an employee or independent contractor (such as a property manager or on call repair person) can be deducted as a business expense. Additionally, fees paid to a professional (such as an attorney, accountant, real estate investment advisor) can also be deducted as operating expenses.
Insurance Premiums
Taxpayers can also deduct and premiums paid for almost any insurance related to your rental property. These can include, but are not limited to, flood insurance, and landlord liability insurance. Additionally, if you have wage earning employees then you can deduct the associated workers compensation insurance premiums.
Claiming the Deductions
There a numerous categories on IRS Schedule E that you can list all of the deductions you are claiming. However, although the IRS gives you flexibility regarding the items you can deduct, you will need to keep records of all your expenses in case you are questioned by the IRS.
Interest
As a landlord you will pay a decent amount of money in interest. Fortunately, many of these expenses can be deducted on your tax return including mortgage interest, loans to improve the property, and credit card interest on goods or services used in your property management.
Travel Expenses
If you have to travel to maintain your rental, collect rent, or show off the property, then you can deduct these expenses. You have the option to either deduct the actual expenses - which can be especially useful if you must travel by plane and stay in a hotel - or take the IRS' standard mileage rate for any miles driven.
Home Office
If you have a home office that you use to run your property management business then you may be eligible to claim the home office deduction. However, in order to qualify as a home office in the eyes of the IRS the room must meet certain specifications.
Employees, Independent Contractors, and Professionals
Any wages paid to an employee or independent contractor (such as a property manager or on call repair person) can be deducted as a business expense. Additionally, fees paid to a professional (such as an attorney, accountant, real estate investment advisor) can also be deducted as operating expenses.
Insurance Premiums
Taxpayers can also deduct and premiums paid for almost any insurance related to your rental property. These can include, but are not limited to, flood insurance, and landlord liability insurance. Additionally, if you have wage earning employees then you can deduct the associated workers compensation insurance premiums.
Claiming the Deductions
There a numerous categories on IRS Schedule E that you can list all of the deductions you are claiming. However, although the IRS gives you flexibility regarding the items you can deduct, you will need to keep records of all your expenses in case you are questioned by the IRS.