Tax Benefits of Investment Properties

Taxes are on everyone’s mind at the beginning of every year.  That isn’t the only time to think about taxes – especially when you own rental property!

Here are a few things that you want to keep in mind – some happen more often than the others, but all the same they can help you.

Insurance

You can deduct the premiums you pay for almost any insurance for your rental activity. This includes fire, theft, and flood insurance for rental property, as well as landlord liabilty insurance.

Legal & Professional Services

Finally, you can deduct fees that you pay to attorneys, accountants, property management companies, real estate inveestment advisors, and other professionals, depending on how large your rental portfolio is.

Interest

Common examples of interest that landlords can deduct include mortgage interest payments on loans used to acquire or improve rental property.

Depreciation

The actual cost of a house, apartment building, or other rental property is not fully deductible in the year in which you purchase or pay for it.  Instead, landlords get back the cost of real estate through depreciation.  This involves deducting a portion of the cost of property over several years.

Repairs

The cost of some repairs on your investment property can also be deducted as long as these repairs are not excessive or unreasonable. These repairs might include repainting, fixing leaks, new flooring and replacing broken windows among others.

Now like we said, some of these things happen more often than others – and hopefully some are few and far between. It never hurts to know regardless!