Real Estate Law. Tax deductions and rental income (by:Viara Zaprianova Marshall)

Your taxes and your rental income

We often don’t realize how much we can benefit from our taxes when we have a rental income and are paying much more than we should or have to. Knowing the legal tax deductions for owners of rental property will make our task much easier and our business more profitable.

As many of you probably know, the interest on the mortgage loan payments that is used for rental property improvement is deductible and any interest from a lending financial instrument – like the use of a credit card for the purchase of services or goods, that will be used solely for rent activity purposes is deductible as well. The same applies to any repairs made to the rental property like: fixing leaks, painting, replacing windows, floors, garage facilities, façade of the building, done annually or during the years.

Vital for your tax planning would be the depreciation of your own property. It’s the real cost of your property and includes the deduction of a portion of the cost on the property. Make sure that you and your financial advisor/accountant know how to plan that amount during the years.

Your traveling expenses are also deductible. This include your regular business drive to manage the property and the long distance travel expenses, including staying overnight in a hotel, airfare, meals and so forth related to your rental activities. You can use the actual expenses for gasoline or repairs on the car you have made or profit from the standard mileage rate.

Any expenses you had for professional legal, accountant services, property management firms, participation in real estate investment seminars or any other professional advice you have received are deductible.

The expenses you have for independent contractors and employees that are hired with regard your rental activities are deductible (like the repair workers, hygienists, security guards, the resident manager and others.) You can also deduct their health and other worker compensation insurance.

Home office expenses are deductible from your taxable income. This includes any office, workshop, workspace you devote to your business, whenever you rent the place or own the property.

The insurance over the building and landlord liability are also deductible (like accidents, theft losses, fires, floods, etc.)

Knowing your business and the legal norms that protect you and that give you advantages in what you are doing are small steps that will help you grow quickly in you entrepreneurial endeavors.

 Viara Zaprianova Marshall – legal expert; international law, political philosophy, civil-military relations, civil rights, human rights, researcher on real estate and financial planning advantages and liabilities.www.newinternationallaw.com 

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