Tax time is stressful for everyone, and landlords are no exception. But there are several tax deductions many landlords don’t realize they can take. Don’t pay more than you have to on Tax Day this year. Here is a list of deductions for owners of small residential rental property.
- Interest. This includes interest on credit cards used for goods and services having to do with the rental unit, and mortgage interest payments on loans used to acquire or improve rental property.
- Repairs. The cost of repairs to your rental property is fully deductible for the year in which the repair was done.
- Travel. Keep track of mileage when you drive to and from the rental property or anywhere else associated with the property management business. You can deduct the standard mileage rate (51 cents per mile for 2011), or you can deduct your actual expenses (including gas, maintenance, repairs). There are exceptions and qualifiers, so ask a certified public accountant or other tax adviser.
- Employees and Contractors. When you hire anyone to perform services for your rental activity, whether it’s a carpet cleaning service or mold removal, you can deduct their wages as a rental business expense.
- Home office. As a tax adviser whether you can deduct your home office expenses from your taxable income.
- Legal and professional services. You can deduct fees paid to lawyers, property management services, tenant screening services and other professionals that assisted you with the rental property business that year.
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