May 4, 2017
Owning investment real estate is a tried and true method to
accumulate wealth over time while also putting extra money in your pocket each
month with a positive cash flow. When the rental income exceeds the monthly
payment, taxes, insurance and maintenance that’s one of the requirements when
deciding which rental property to buy. But beyond that, there are tax
advantages owning rental property you may not be aware of. Note that you need
to consult your own tax professional to discuss your personal situation.
Interest on a mortgage loan used to finance a rental property is tax deductible
and is usually the single largest tax deduction.
physical structure will depreciate over time and tax rules allow landlords to
depreciate the cost of the property over time by deducting a portion each year
over several years.
Repairs. If your
sink disposal goes bad in your primary residence you have to buy another. It’s
an out of pocket expense. For rental properties, you can deduct that expense
from your taxable income.
Travel. If you
have to drive to the hardware store to buy a new sink disposal you can deduct
the mileage to the hardware store as well as a trip to and from the unit to
make the repair. If you own rental property long distance your travel expenses
and lodging are tax deductible items.
Home office. If
you have an area in your home cordoned off as your home office to manage your
real estate affairs, you can deduct home office expenses.
you can’t deduct insurance on your primary home you can deduct it on your
rental property. If you have employees, you can deduct any insurance premiums
you pay to cover them as well as worker’s comp.
professional. You can deduct the expense for professional services such as
legal fees, accountants, property managers and other professional services
needed for your rental property.
For more information or questions about mortgage loans, please call (855) 757-8748.