Rental Property Tax Deductions

Rental Property Tax Deductions
Own residential rental properties? This article discusses how income from those properties impacts your taxes.
What Constitutes Revenue?
Generally,​ rental income is​ defined as​ any revenue you​ receive from the​ occupancy or​ use of​ residential property .​
Rent,​ obviously,​ is​ included in​ that revenue .​
Many owners are surprised to​ learn revenue also includes rent advancements,​ expenses paid by a​ tenant and any security deposits not returned to​ the​ tenant .​
In fact,​ revenue can also include amounts paid to​ cancel a​ lease,​ even if​ you​ had to​ sue the​ defendant to​ get it.
Yeah,​ Yeah,​ But What Can I​ Deduct?
Tax deductions associated with rental properties are strikingly similar to​ those found in​ any business .​
Technically,​ you​ can deduct any expense reasonably necessary to​ manage,​ conserve or​ maintain the​ property .​
Obvious deductions include mortgage payments,​ cleaning expenses,​ insurance premiums,​ service payments such as​ landscape maintenance,​ repairs,​ maintenance,​ etc .​
Overlooked rental property deductions include:
1 .​
Expenses incurred in​ finding tenants,​
2 .​
Commissions paid to​ third parties that arrange for tenants,​
3 .​
Paying your accountant and/or lawyer,​
4 .​
Mileage for driving to​ and from the​ property [I said,​ No more parties!]
5 .​
Depreciation of​ the​ property,​
6 .​
Depreciation of​ items in​ the​ property such as​ washing machines,​ furniture,​ etc.
Imaginary Rent Deduction
A few creative property owners have suggested that they should be able to​ deduct their customary and standard monthly rent if​ the​ property is​ empty .​
The argument goes,​ If the​ property is​ empty,​ I​ am not making revenue and should be able to​ deduct the​ $1,​500 that I​ am missing out on​ .​
At first glance,​ this almost makes sense .​
Sadly,​ it​ doesn’t fly from the​ perspective of​ the​ IRS .​
Since you​ are not receiving revenues,​ your total revenues for the​ year will be reduced by the​ loss rent .​
You can’t double dip by deducting the​ $1,​500 from the​ already reduced yearly revenues .​
The only things you​ can deduct are the​ expenses you​ incur during this period,​ and only for so long as​ you​ are actively trying to​ rent the​ place.
Rental properties are a​ great investment .​
Even more so if​ you​ stay on​ top of​ your taxes.
Rental Property Tax Deductions Rental Property Tax Deductions Reviewed by Henda Yesti on June 27, 2018 Rating: 5

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