One of the many advantages of owning a rental home is the tax deductions - both those that are financially incurred and those that are just a loss on paper.
In honor of the upcoming tax season, we wanted to share a list of common deductions:
This one makes it to the top of the list as it’s a paper loss and typically represents a significant amount. To calculate your depreciation, follow these steps:
Most rental home investors purchased the home with a mortgage. The interest on the mortgage is fully tax deductible.
Property taxes are deductible. If you have an escrow account to pay for taxes, please see your statement for amounts to deduct.
Your homeowner’s insurance premium is deductible.
Fees assessed by your management company are fully deductible.
If you pay utilities for your residents, you’ll be able to deduct those amounts.
Consult your accountant for the specifics as this could trigger an audit.
If you performed work on your rental home, these costs are tax deductible.
Any fees assessed by an attorney or other professional are deductible.
Lastly, if you purchased or refinanced a home this year, be sure to take a look at the closing costs you paid as most items are tax deductible. Better yet, give your settlement (or closing) statement to an accountant with real estate experience and they’ll be able to help guide you through this.
