Whether you are a tea party person or wearing any other political hat, you still have to pay taxes. We don’t love it but it is our civic duty. Since it’s almost April 15th, the big day, and we’ve talked about 1031 exchange and the sell now pay later theory, I thought I would share some knowledge about ways to save on what you have to pay. Did you know that there are many write offs for investment property that you should be claiming? If you are not aware here is some good information to get you going.
Buying an investment property is not for everyone but there can be great rewards on a short and long term basis. If you own an investment property, all that rental income is nice on a monthly basis and more than likely a higher rate of return than you would make if that initial investment capital were sitting in a money market. Of course there are some pitfalls like the midnight calls for no heat or the occasional bad tenant stories, but for the most part rental property is a great investment. Tenants pay your mortgage and the long term financial outlook is positive as the property continues to increase in value. The other advantages to investment properties are the many tax write offs that you can claim when filing those pesky forms.
Here are the top 10 for write offs for investment property owners:
- Interest: This is often the largest deduction taken.
- Depreciation: Not fully deductible the first year.
- Repairs: Fully deductible so keep a running list of all repairs made.
- Local Travel: Yes you can claim your travel to the property, even gas!
- Long distance travel: If you own an out of area property hotels etc are allowed.
- Home office: Offices must meet a minimum requirement but can be deducted.
- Employees and Independent contractors: Anyone you hire to do work on the home.
- Casualty and theft losses: Losses such as fire and flood are usually taken into account after Insurance.
- Insurance: Premiums are deductible.
- Legal and Professional Services: You can deduct your CPA fees incurred for rental property. Be sure to show them this list to be sure they have not forgotten anything.
After you have filed, and you are anxiously awaiting that return download the new IRS App IRS2GO on your iphone or Android and you can keep track of that return and watch your refund status. $$$$$$