Tax Deductions To Consider For Rental Properties

Last modified on June 25th, 2024

Property managers and owners know that rental real estate yields more tax benefits when compared to many other investments. However, even with all those benefits, property owners are often forking over more taxes than they have to. The problem comes with tax deductions. Many owners of rental properties fail to take advantage of these deductions come tax time. Property managers should be aware of these tax deductions on residential rental properties to ensure the business isn’t overpaying at tax time.

Even though, ultimately, the tax deductions are benefits received by the owners, it is property management that has the ability to control the outcome when involved in the day-to-day finances.

Interest on Mortgage Payments and Credit Cards
As a property manager, you often foot the bill for goods and services for the rental property, acquiring interest on these purchases. These little purchases for a business are easy tax deductions. Property managers should also notice that owners could deduct interest incurred on mortgage payments when acquiring or improving rental property.

Deduct Repairs on the Property
The cost of repairs on a property can quickly add up whether they are just normal wear-and-tear measures or more imperative repairs. These repair costs are fully deductible in the year in which they are incurred. Property managers should take careful note of repairs such as repainting, fixing floors or gutters, repairing leaks or replacing broken windows so they can properly report them to owners to be deducted.

Count Up Travel Expenses for the Rental Property
Property managers and owners should always record their travel time for a property, whether local or long distance. For example, if the property manager has to drive to meet someone over a resident complaint or head to the hardware store for an item for the property, they should deduct their travel expenses. Property managers can either deduct their actual expenses. Long distance travel for a rental property might include hotel bills, meals and airfare. These can also be deducted come tax time. Property managers should just be careful to have the documentation of their expenses in case the IRS has questions.

Factor in Theft and Damage Losses
In the unfortunate case that the property is involved in a fire or a flood, property managers should remember these losses could be deducted. How much the owner can deduct depends mostly on how much of the property was damaged and whether the insurance covered the loss.

Don’t Forget About Insurance and Professional Service Deductions
Property managers should also be aware of the tax deductions to be had on insurance policies. Premiums paid for insurance plans can be deducted when pertaining to a rental property. This includes when fire or theft occurs in a rental property. Property managers should also be aware that any service you pay, whether to accountants, attorneys or other professionals, could also be deducted come tax time.

Property managers may not oversee all of the above areas, but they can advise owners on how to take advantage of tax benefits. Plus, they need to ensure that accurate records are kept for appropriate deductions!


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