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January 22, 2018

Apart from having an attractive rental property, you can also be a landlord with a good reputation. The reputation can be used as a unique advertising strategy if your future tenants care to check. There is no need to stop investing in the property in order to earn a profit when you can write most of it off against your taxable income.

Utilities, Maintenance, and Repairs

Be handy whenever your tenants require it. Putting off both minor and major repairs can be devastating for your property and for the life quality of your tenants. As you do not wish for either of the two things to happen, take care of them sooner, rather than later and deduct them from your taxable income. The repairs are meant to be efforts invested in retaining the current state of the property while maintenance is quite similar but it does not involve fixing anything e.g. gardening and landscaping, cleaning etc. Utilities are also tax-deductible, however, since most landlords get reimbursed for the utilities by the tenants, the reimbursement has to be recorded as an income.

Loan Interests and Depreciation

Interest accrued through any loan used to fund your rental property is tax deductible. This includes mortgage and mortgage points, loan for improvement of the property, and a portion of credit card balance used for the property.  All of the assets you have purchased with above-mentioned loans (or without them) the equipment, the improvements and the building itself, not the actual lot, can be deducted over a period of years.

Casualty losses, Insurance, and Taxes

Any taxes and fees related to your business and its operations can be deducted from the taxable income. Also, the insurance premiums you pay for your property or anything else related to it is also deductible. The insurance, if reasonable, is a justifiable business expense. Also, regardless of your insurance type, you can get a tax deduction for loss incurred through damages by flood or fire, for example.

Operating Costs

The costs of operating your business are naturally business expenses and thus can be written off. These include the expenses of renting office space as well as office supplies, professional consultants and legal fees, management fees since you may decide to hire a property manager, for example, and start-up expenses which are spread over a number of years and are operating expenses incurred prior to starting the business. Be careful when deducting a home office, do not abuse it, you could be audited for any unreasonably high expenses.


Travel refers to travel expenses and vehicles. If you live far away from your rental property, you can list transportation fares, as well as, hotel stays and some meals as your business expenses. When it comes to vehicles, they are treated pretty much as any other assets you have associated with your business. The value of the vehicle is depreciated over a number of years while any maintenance and repair costs can be deducted within the year when they occurred. This also includes gas.

For Foreigners

For those who have decided to move to the USA from areas with strong real estate and rental markets (e.g. Canada, Australia, UK) and who have thus decide to rent rather than sell in order to have an additional source of substantial income, different rules may apply. As leading accountants in Sydney point out, a lot of the city’s ex-residents choose to rent their property and face enormous issues with the filing of the tax. The main issue usually arouses between the value of the structure and the value of the land which requires the assistance of a surveyor whose job is to estimate the value and the difference between the two. Once everything is clear, you should report it on Schedule E and claim depreciation.

Certain expenses always seem more affordable and reasonable when you know they are tax-deductible. However, with taxes, there is one thing you always have to bear in mind and that is, being honest. Anything suspicious will be audited and you may end up in more trouble which is not worth the money you were hoping to save.

Author Bio: Steven Clarke is business consultant/DIY enthusiast and a regular contributor to several websites. His areas of expertise include taxes, accounting, real estate and home improvement. In his spare time, he likes to write about his ideas and share them with the world.

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