As a property owner, there are many tax benefits and deductions that can help improve your overall revenue. Overlooking some of the most common (and less common) deductions can leave money on the table. From routine expenses to professionals services and travel to see your rentals, it's helpful to know everything you can legally deduct to boost your revenue.
Here are the top tax deductions that owners sometimes overlook during tax season. Whether you have one property or several rentals in your portfolio, Gulf Coast Property Management company can help you keep track of your expenses and maximize deductions every year!
Common Tax Deductions
Having a real estate business gives you access to many IRS deductions. Keep accurate business records and your rental property expenses to make it easier during tax season.
Common rental property deductions include:
- Mileage and Automobile Deductions: If you drive to handle anything at your properties or conduct business related to your rentals, it's deductible. Select the 'standard mileage rate, and you only need the mileage at tax time (not how much you spend to maintain your vehicle). Look for mileage tracking apps like Stride, Trip Log, Hurdlr, Everlance, and MileIQ. A portion of your auto insurance might also qualify as a deduction.
- Business Travel: Are you an investor traveling from out of town to view a Gulf Coast rental property? Deduct your flights, rental cars, hotels, and other expenses. You can also deduct 50% for business-related meals.
- Asset Depreciation: This can apply to some equipment used for rental property business and appliances purchased for your properties. Your rental property itself also benefits your taxes through depreciation. You can apply deductions based on its depreciated value over several years.
- Independent Contractors and Employees: Hired a bookkeeper or cleaning help? Payroll, health insurance, independent contractor-related costs—and property management fees when choosing Gulf Coast Property Management— are all deductible.
- Insurance: Liability and landlord insurance premiums for your rental properties for your business can also qualify as a deduction. If you have employees who work with your properties and renters, workers' compensation can also be a deduction.
- Rental Property Marketing: Keep track of expenses when listing properties, creating yard signs, hiring a real estate photographer, or using a property manager to market your rentals.
- Office Expenses: Paying rent and utilities for an office space related to operating your real estate investment portfolio can qualify as deductions.
- Rent for Any Tools and Equipment: Do you rent your office equipment or tools? You can deduct these.
- Supplies and Materials: Bought paperclips, pens, and stamps? These are deductible if used within a year and total under $200.
Start tracking these expenses now to get ready for next season's tax time. If you're not sure if an expense qualifies as a deduction, work with an accountant or consult a property manager to help you qualify and track valid deductions to boost your tax benefits!
Necessary Expenses That are Often Overlooked
Tax season is stressful enough for property owners, especially if you don't have a Gulf Coast property manager organizing your records. Hence, you don't want to miss certain real estate business deductions that business owners might miss.
- Green Initiatives: Did you upgrade your lighting, water heater, or HVAC unit? Check with the Department of Energy for these and other deductions.
- Improvements vs. Repairs: When you file your taxes, you can deduct the cost of replacement parts and repair work. However, real estate investors must understand the difference between renovations that qualify as necessary capital improvements versus upgrades that aren't necessary for the safety, ongoing life, or operation of a rental property. Certain necessary repairs can also qualify as a deduction. Work with Gulf Coast property manager to categorize upgrades and repairs for tax purposes.
- Software: When using property management, accounting, or other rental-property-related software, it's deductible. Software used for background checks or marketing can also qualify as a deduction.
- Supplies: Did you buy a new high-resolution camera for listing photos? Deduct it along with your office supplies (toner, paper, postage, pens, envelopes). Don't forget rental property supplies like bulbs and locks.
- Your Business Entity: Did you set up a corporation or LLC for your rental properties? It's a smart way to protect your investments, and the IRS lets you take up to $5,000 in deductions for your business in its first year.
Overlooking these vital tax deductions and benefits can cause investors to pay more money in annual taxes! A property manager is an excellent resource to maximize ROIs for your rental property business.
What else can a property manager help me with? Check out these blogs.
Take Advantage of Your Rental Property Tax Deductions
Knowing how to file your business, income, personal, and property taxes can get pretty confusing. Don't leave money on the table. Gulf Coast Property Management not only delivers the best services to keep rentals in excellent condition and renters happy, but we also help property owners track every possible deduction allowed by the IRS.
If you're not sure about everything you can deduct to maximize ROIs, let's talk about how we can help!
Find the right property manager to meet your needs. Download a free copy of "The Guide to Finding the Best Property Management Company in Sarasota & Manatee Counties."