Are You Paying Too Much Tax on Your Rental Property?

Owning rental property is a lot of work, but also leads to the most available tax deductions over any other investment opportunity. If you liked collecting a rent check every month, you are going to love the tax deductions available to you as a Dallas property management company.

Some of the most common rental property expenses that are deductible include:

  • Costs of advertising and marketing the property
  • Cleaning fees paid to professional companies between tenants
  • Fees paid to a professional Dallas property management company
  • Premiums paid for fire, theft, flood, liability, employee health and workers compensation insurance
  • Legal and professional fees paid to attorneys, accountants and real estate investment advisors
  • Interest paid on the mortgage, and credit cards used for rental activities
  • Utilities paid by you as the landlord

Less Common Deductions

As the leader in property management that Arlington, Texas has to offer, we put together a list of deductions that are not so obvious, and are often overlooked by landlords. Taking these deductions could be the difference between you turning a profit on the rental property, and losing money.

Local Travel Expenses

Driving by your rental property for an inspection, or to the hardware store to pick up the part you need to fix the leak under the kitchen sink? Don’t forget to track the miles driven in your car. These can become deductions in one of two ways:

  1. Use the exact amount paid (for gas, upkeep and repairs on the vehicle)
  2. Use the standard mileage deduction as determined by the IRS (For more information on these two options, visit the IRS website, www.irs.gov)

Cost of Repairs

This is one area that Dallas property managers need to be careful in as the IRS classifies repairs and improvements as different categories. Repairs are defined as anything that keeps the property in good working order-such as replacing a broken window or fixing a leaky faucet. However, if you instead choose to replace all windows with double paned or energy efficient glass, this is an improvement that will extend the life of the property over the years. While the costs of repairs are deductible, the costs associated with improvements must instead be depreciated.

Depreciation

Landlord can recover the cost associated with acquiring real estate through the use of depreciation which allows them to deduct a small portion of the costs over a period of many years. Depreciation starts when the home is ready for rent, even if not tenants are occupying it, and stops either when you have recovered the cost of the home or you stop renting the property.

Casualty & Theft

If the rental property was damaged due to a natural disaster, you may be able to deduct a portion of your loss. The amount deductible is determined by how much of the property was damaged, and how much of the loss was covered by insurance

If you question deductions available to you as a rental property owner, feel free to consult your Dallas property management team, and we will be happy to assist you! More information on all of the above listed deductions can also be found on the IRS website, www.irs.gov