Know Your Property Management Tax Deductions

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Your rental properties are a business. As a landlord, you’ll owe taxes on your Uptown Dallas investment properties. A profitable business requires you to minimize expenses to maximize your bottom line. From making affordable upgrades (rather than extravagant upgrades) to keeping tenants in your properties, you want to keep as much of your hard-earned cash as you can. 

Don’t be one of those of landlords that pay more in taxes than they need to pay each year. 

When you know what you can and can’t deduct as a landlord, you’ll pay only what you need to pay in taxes. Here’s your guide to tax deductions for your rental properties. 

Property Repairs 

When you make repairs to your rental properties in the Highland Park area, you can deduct the costs of those repairs. 

Good examples of necessary repairs include fixing gutters or the roof, repainting, repairing damage to floors, fixing leaks, fixing broken windows, or plastering. 

These repairs could take place during a Make-Ready for a property. Still, repairs can happen at any time, and you can deduct them. 

Be sure you know the difference between a repair and an improvement. Improvements don’t always qualify for a deduction. The IRS sees “improvements” as investing in your property rather than repairing it to keep the home safe for tenants. And improvement increases the value of your property. 

However, you can deduct some improvements as depreciation. Consult with a property management company to help determine which expenses are a repair vs. an improvement. 

Local Business Travel

When you drive to your rental properties for any business purpose, that mileage is deductible. 

Whether you’re doing a move-in inspection, performing maintenance, or showing one of your homes to a tenant, deduct your mileage from your personal home or office to your properties. 

Again, be careful with improvements. Mileage isn’t deductible if you travel to a property to work on an improvement. However, if you’re performing a repair on the property, those miles are deductible. 

Mortgage Interest

If you carry a mortgage on any of your properties, deduct the mortgage interest. This is often a landlord’s single most significant expense for a deduction–so don’t forget about it.

You might also be able to deduct interest on loans needed for repairs to your investment properties. If you’re unsure about what kind of interest can be deducted, consult with a property management company. 

Rental Property Depreciation

In the year you pay for a property, the cost of the house or other rental property is not fully deductible. 

However, landlords can deduct a portion of the cost of a property pro-rated over the expected lifetime of the property. Depreciation begins when the property is ready and available for tenants to rent. 

Even if the property remains empty for a while, depreciation begins when it’s ready and available.

Your Home Office

Make sure you have a home base of operations for your investment property business. Your home office and associated expenses are deductible. 

You might spend considerable time at your properties or taking care of tenants needs. Even with time spent away from an office, you need a place to host your business files and run your business. 

If you also have a workshop or storage space used for your rental property business, you can also deduct that space on your business taxes. 

Be sure your business areas meet the technical requirements of an office or workshop space. If the spaces meet the criteria, you can deduct a portion of utilities and rent.

Insurance Policies

Keep track of all insurance policies you have for your rental properties. You can deduct most–if not all of them. 

This includes theft, fire, and flood insurance for rental properties. You can also deduct landlord liability insurance on your taxes. 

If you have employees as part of your landlord business and you provide health insurance, you can deduct it, along with worker’s compensation insurance.

Professional and Legal Services 

Do you use any professional services to help maintain your properties or your business? If so, you can deduct those services.

Be sure you deduct fees for attorney services related to your rental properties. If you use an accountant, you can deduct their services and fees, too. 

Let the Experts Help With Deductions

Partnering with a property management company benefits your taxes, as well. 

Your property managers provide professional services for your rental properties. You can deduct any fees paid to your property management company while they shoulder the day-to-day work for you. 

Uptown Dallas Properties can help you as a tax deduction for your investment property business. We are tax deductible! Plus, we’ll help you keep track of expenses and every item you can deduct on your business taxes. 

If you’re searching for the best property management partner in the Dallas area, let us help. Download our free guide. It’s your “Guide to Finding the Best Dallas Property Manager.”