Hey, Landlords! Did You Know You Get More Money? (through Tax Deductions)

For all regular and Section 8 landlords, you can get more money just by understanding tax deductions (good) and credits (better) that you can get.

Let’s take a look at the different ways you can make more money by paying less taxes.

Mortgage Interest Payments: Any interest you pay on a loan to purchase or improve a rental property can be deducted from your income.

Credit Card Interest Payments: When you use your credit card to pay for rental expenses, you may deduct the interest that you are paying on your credit card charges.

Property Depreciation: Most investors know about this one. The building on your property will only get older—not newer. So eventually, it will wear. IRS Tax Code allows a landlord to deduct a certain amount of income resulting from the building value depreciating (since it is getting older over time and, theoretically, will need to be replaced).
Repair Costs: This is pretty straightforward. Examples include replacing broken windows, plastering, fixing gutters, repainting, etc. These costs can be deducted.

Travel Costs: As long as your travel (local or long distance) is rental related, then you can deduct these expenses. Going to the hardware store to buy repair supplies is okay. Driving your kids to daycare is not okay, even if you slapped on some sort of magnetic sign.

Office Space: This includes Home Offices. Actually, you can claim any workspace you use to handle your rental business, including a workshop or storage space.

Employee Costs: Do you pay someone to handle some tasks for your rental business? You get to deduct these expenses from your taxes. This includes money that you pay for their worker’s compensation insurance and any health insurance to buy for them.

Subcontracting Costs & Professional Fees: Did you pay someone to make repairs to your rental property? Did you pay someone to give you legal or accounting advice? No matter the service, as long as it is related to your rental business, you get to deduct these costs from your income.

Insurance Premium Costs: You can deduct any money you pay for insurance that you have to cover the rental property, including fire, theft, and any other incidentals.

Property Casualty: Hopefully, you covered yourself with insurance. However, some or all of the value casualty that your property suffers from fire, earthquake, tornado, flood, etc. that is NOT insured can be deducted from your taxable income.

You need to be careful. You may not be eligible for some or all of these tax benefits if you rent to a family member or a friend. For this and anything else, you will need to consult a tax professional. This author is not an enrolled agent and is not advertising as a tax professional.