Tax Deductions Can Spell “REFUND” For Landlords

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.

1. 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.
2. Repairs. The cost of repairs to your rental property is fully deductible for the year in which the repair was done.
3. 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.
4. 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.
5. Home office. As a tax adviser whether you can deduct your home office expenses from your taxable income.
6. 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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Worst NYC Landlords Called Out on New Website

There are a few negative landlord stereotypes out there — every landlord knows his or her reputation is built not just on one’s own actions and history with tenants, but on the public’s general perception of landlords being people who might want to cut corners on maintenance and repairs in favor of a better bottom line.

That stereotype is unfair for the vast majority of landlords, who conscientiously stay on top of needed repairs and treat their tenants with respect and honesty. But there are still bad landlords out there, muddying the rental waters for the good property managers. Now New York City’s public advocate is trying to change that, at least in his town. Thanks to an agreement with the online classified website Craigslist, tenants in New York City can find out more about a prospective landlord by clicking a link, “NYC’s worst landlords,” on the apartment search pages on Craigslist. The link takes renters to a page on public advocate Bill de Blasio’s website that lists dozens of landlords with the worst inspection records. Tenants can even click on the landlord’s name and be shown a map via Google Maps with the buildings that landlord owns.

The information is compiled by the New York City Department of Housing Preservation and Development, and the website also tells tenants how to file a complaint against their landlord. The list is revolutionary in giving tenants greater and easier access to information about landlords whose credentials and professional records are sub-par at best. Tenants often don’t have the luxury of performing a background check on their prospective landlord the way landlords do on their prospective tenants.

Beyond that, the list also is a wake-up call to landlords everywhere to make sure your reputation is solid, your record of housing violations is clean, and you are in good standing with your current tenants and the community at large.

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Landlords Should Heed Top Trends in Employment Screening

Employment Screening Resources (ESR) has announced its annual list of emerging and influential trends in employment background screening. Some of these 2011 trends have implications for the field of property management when it comes to tenant screening.

1. Controversy over whether it’s discriminatory for employers to use credit reports for employment increase. Because of unemployment, many would-be workers are stuck in a cycle of having bad credit because they can’t find work, and being unable to get a job because they have bad credit. In response, some states have passed laws or are considering laws to restrict the use of credit reports and employment and the U.S. Equal Employment Opportunity Commission (EEOC) is looking closely at this area and has filed lawsuits alleging discriminatory use.
2. Questions about criminal records of job applicants become more difficult for employers to ask. An employer who hires a person with a criminal record can be found liable for negligent hiring if the decision results in harm and could have been avoided by a criminal record check. The easiest way to avoid this is to perform a thorough background check on a job applicant, but the issue of whether employers can use a job application to ask about one’s criminal has become more complicated.
3. Employers discover fast and cheap online background checks using criminal databases not always accurate or legal. With the trend toward more thorough checking into the pasts of potential employees, many websites are springing up that promise cheap instant background checks using “national criminal databases.” But most of these sites aren’t legitimate or thorough. There is much truth to the saying “You get what you pay for.”
4. New accreditation standards help employers select background screening firms. Last year the National Association of Professional Background Screeners’ Background Screening Credentialing Council created the Background Screening Agency Accreditation Program to advance professionalism in the background screening industry. The program promotes best practices in the industry, awareness of legal compliance, and the development of standards to protect consumers.

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Rents Climb as Rental Market Gets Hotter

Have you noticed rents in your area creeping up in recent months? Have you been inundated with more applicants for a vacancy than usual? Have you thought about having to increase your rent, or have you upped it recently? If so you’re part of the national trend that’s responding to the fact that more people are renting than buying these days. The national vacancy rate for rental units is down to 9.4 percent — the lowest it’s been since 2003.

The markets for rented and purchased homes usually move in opposite directions. When more people are buying homes, rents tend to stay low or go down because of decreased demand for rental units. But when high interest rates or a weak economy cool the housing market, more people look to rent rather than buy. Since it takes awhile for builders to add more units, the supply-demand mismatch drives up rent prices.

And that pool of renters is growing by the day. Foreclosures have turned millions of one-time homeowners into renters. In response, Research firm REIS estimates that nationwide, rents will rise an average of 3.4 percent in 2011, which is more than inflation or incomes are likely to rise. In cities like San Jose, Calif., Washington, D.C., Seattle, and New York, rents will go up by more than average. And in a few select neighborhoods, rent increases could exceed 10 percent.

If you’re a landlord, be sure your rent price is staying competitive in your market. And if you’ve been thinking about getting into the business of property management, now is a great time to act on that dream!

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Rent Control in NYC

Rent control has long been a contentious issue between landlords and tenants, and in New York City where thousands live in rent-controlled buildings, the issue is a huge one. That’s why last week’s ruling by New York state’s highest court is so important: It has ruled against rent-stabilized tenants who were fighting to prevent landlords from raising the rent by $45. It is said that the decision will affect more than 300,000 apartments in the city with rents under $1,000.

Splitting 5-2, the New York State Court of Appeals ruled in favor of a 2008 Rent Guidelines Board move to allow small dollar increases on rent for apartments with one-year leases that have been occupied for at least six years. In doing so, the court overturned lower court rulings on the issue. Rent regulation legislation in the state already allows landlords to raise rents on some regulated apartments by 4.5 percent, but landlords have argued that the proportional increase doesn’t allow them to keep up with the cost of repairs.

Tenant advocates say the decision might help rally support behind the claim that rent laws need to be strengthened to properly protect tenants.

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Criminal background checks take step back in North Carolina

Thanks to a change instituted by the Administrative Office of the Courts, those who want to see state criminal records on prospective tenants will have to pore through old files in a much slower computer database system than what was previously being used.

According to the AOC, the change was necessary to protect the secrecy of criminal records that have been expunged. Through the previous protocol, the most cost effective way to search for criminal records was for private vendors to buy access to the state’s database. In some cases that information was outdated, meaning convictions or charges that had been expunged were still showing up on people’s records.

Criminal records in North Carolina are public. But the electronic system that keeps them is difficult to manage and nearly impossible for the average person to search records across the state. People can visit local courthouses and search criminal records, but they can see results only for that particular county, not the whole state.

It’s hard to say what this means for tenant screening services, but costs could rise as vendors are forced to pay more to get the information they need for their clients.

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Make sure that rental application is legible

Many tenant applications are filled out hastily, as applicants want to get their paperwork back to you before anyone else scoops up the place their interested in renting. The first mistake a landlord can make when reviewing an application is to assume something — anything — when trying to decipher someone’s handwriting. If you’re unclear whether that digit in someone’s social security number is a 6 or a 0, don’t guess! Likewise, don’t guess about the spelling of a person’s name. When it comes to background checks, you’ll need the following information to be rock solid:

1. You’ll need the person’s social security number in order to do a credit check. Thousands of people have common names and birthdays, and if you guess on even one of the person’s social security numbers, you might end up pulling the wrong person’s credit.
2. You’ll need a correct spelling of the full legal name and date of birth for any criminal background check or previous eviction check. Most public records databases have removed SSNs from their files. So screening providers use the name and DOB identifiers to narrow down their search. So a criminal record for “Thomas McMurray, born 6/2/1987” may not come up if the landlord inputs “Tom McMurry, born 6/7/1987.”
3. You’ll also need the proper spelling of the applicant’s name to do a state or national search in sex offender registries.

If something is unclear, call the applicant and double-check. Also let them know that if you have to re-run a background check because the information wasn’t clear and correct, they’ll have to foot the bill.

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