Rental Properties: 7 Tax Benefits

Rental real estate makes for a great investment, but still some landlords end up paying more than they absolutely have to when tax season rolls around. If you’ve been looking at rental properties or already own a few, know that there are seven tax benefits in particular you should take advantage of to save money and continue making a good investment.

  1. Interest

This one is mentioned first because it’s one of the largest expenses landlords can deduct from their taxes. Specific types of interest you can deduct include the interest on your mortgage payments for buying or improving your property, and the interest paid on credit cards used to buy up services and products for your rental properties.

  1. Repairs

Necessary, routine and reasonably priced repairs made to your rental properties can be deducted from your taxes as well, but only from the tax year in which the repairs were made.

  1. Depreciation 

When it comes to the tax benefits associated with the depreciation of your rental property, the total rate is gradually deducted over the years, rather than the property being fully deducted for the tax year you bought the property.

  1. Local Travel

Driving to a warehouse to pick up repair supplies for your rental properties? Or maybe you need to drive to the property to take care of a tenant complaint. In either case, you can deduce your travel expenses from your taxes. You can choose between deducting for the actual miles you traveled for your property, or for operating expenses such as maintenance, upkeep and fuel.

  1. Home Office 

While this deduction comes with a few requirements, you can save money on your taxes for the cost of maintaining the home office you use for your rental property.

  1. Long Distance Travel 

You can also receive a tax benefit for any long distance travel made for your rental property. Because the IRS goes through long distance travel deductions with a fine-toothed comb, you’ll want to keep all of your receipts and expense records well-documented and organized.

  1. Insurance

Paying those insurance premiums month after month can be made easier if you know you can receive a tax benefit from them. Nearly any type of insurance you have on your rental properties qualifies for a deduction, including the workers’ compensation and/or health insurance you have for your property employees.

Be sure you sit down with your accountant sometime this tax year to see which benefits you and your rental property might qualify for. Owning and maintaining rental real estate doesn’t have to be a hassle if you’re well-informed.

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