Posts Tagged ‘Taxable Income’
Rental Property Tax Deductions That Will Slash Your Landlord Tax
If you are a landlord or property manager, knowing your rental property tax deductions is vital for cutting your taxes to the minimum. Find out how to enjoy lower landlord taxes and boost your profit margins right now. Rental property tax deductions are basically rental expenses that you are allowed to deduct when calculating your taxes. They are crucial because they will reduce your total amount of taxable income.
To cut down your landlord taxes, you can should to include as many tax deductions that you are allowed to use. The following are the common and important deductions that you can enjoy as a landlord:
1. The Depreciation Value of Your Property
When you buy a new rental home, you cannot claim the full amount that you paid for it as expenses right away. Instead your property is slowly depreciated over a long period of time.
Depending on the country that you live in, most depreciation periods for residential property range from 20 to 30 years. Home owners are usually not allowed to claim depreciation as tax deductions so you will not be able to apply this to your own home.
2. The Premiums for Your Landlord Insurance
Being a landlord means that you will usually have to buy a series of insurance polices such as building insurance, home contents insurance and landlord liability insurance.
You will be able to treat the premiums that you fork out for all your landlord insurance policies as tax deductions. If you employ people to manage your rental real estate, you will be able to claim the premium for their worker insurance as rental property tax deductions as well.
3. Interest on Your Mortgage and Credit Cards
Unless you are awfully rich, you would have taken out a mortgage loan to pay for your property investment. Fortunately you are allowed to deduct this sizable interest charged by your bank or mortgage lender.
If you pay for any of your rental expenses by credit card, you will also be allowed to deduct the relevant credit card interest from your total taxable income.
4. Your Property Repair and Maintenance Bills
The money that you fork out to maintain your rental home in habitable condition is also tax deductible. This refers to any repairs or maintenance that are conducted to make sure that it meets your local health and safety housing standards.
However you must know that any home improvements that you carry out for the purpose of boosting the values of your real estate cannot be considered as a deduction. If you hire a contractor or repairman for repairs, make sure you ask them to give you a receipt with the property costs and type of repair work stated on it.
5. Travelling Costs for Managing Your Real Estate
Any travelling expenses that you rake up for rental activities such as rent collection and property repairs are also tax deductible. You are usually allowed to deduct both your gasoline costs and vehicle’s maintenance bills. If you own rental properties abroad and you travel overseas for real estate activities, you may even to claim your airplane tickets, hotel stays and travelling fares as rental property tax deductions.
The tax agencies in most countries will monitor your tax claims for overseas travel quite closely so be sure not to abuse the system and keep proper written records of your spending such as receipts and bills.