"How to Maximize Your Rental Tax Deductions"
rental tax deductions are the proverbial icing on the cake. One of the greatest benefits of
real estate is that much of your expense is tax deductible, even financed expenses that did not come out of your own pocket in the first place!
LIST OF RENTAL PROPERTY DEDUCTIONS
Always consult your accountant, because I am not one. That said, here are the rental property expense items that you would typically be able to claim as deductions on your federal tax return:
HOW TO MAXIMIZE RENTAL PROPERTY TAX DEDUCTIONS
First and foremost, get an accountant. Beyond that, here are some random tips on rental tax deductions.
- Log your mileage when driving to/from your properties.
- Remember that financed expenses can also be deductible
- Meticulously maintain your
/ budgeting spreadsheet so that all your revenues and expenses are itemized.
- Retain receipts and invoice copies for everything
- Make sure your filing system is organized such that you can find anything you may need.
The bottom line is that most of your real estate expenses are deductible. Between your mortgage interest deduction and all the other tax benefits, you might be in line for a nice tax refund. My recommendation is, when in doubt, log all expenses on your spreadsheet tool, and let your accountant tell you what's deductible and what's not.
here to download a copy of the monthly budgeting spreadsheet I use (note: you'll need Adobe Reader...to download a copy, click here).
The ability to deduct expenses and investment property depreciation is what makes real estate a solid investment strategy. You see, when you are an employee, your income is taxed, and whatever is left over is yours to spend. With real estate (or any small business for that matter), you essentially spend first, and then you get taxed on the balance.
It's an overly simplistic explanation for sure, but you get the point. Rental tax deductions like the mortgage interest deduction really serve to maximize your cash flow, and you need to take advantage of them as much as possible.
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