How to Maximize Deductions for Rental Income
If you have been fortunate enough to purchase a non-owner-occupied property used as a rental property, that property can be used to maximize deductions when tax season rolls around. A rental property gives the opportunity to write off every expense from interest to repairs and contractors, thus offering numerous tax benefits through deductions.
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Things You'll Need
- Receipts from expenses accrued relating to rental property
- Canceled checks from tenant
- Form 1040
- Lease agreement
Instructions
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Report any interest relating to the rental property. Interest can be associated with credit cards used for repairs to the property as well as reported on loans used for the property--whether to obtain or repair.
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Report any income from the rental property and any expenses accrued from the rental property on Schedule E of Form 1040. Report all expenses related to the rental property, such as repairs, property taxes, depreciation and mortgage interest.
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3
Report any fees accrued through legal services or other professionals that pertain to the rental property. Attorney fees to draw up lease agreements, fees from the plumber or other contractors are all tax-deductible.
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4
Report the costs of any and all repairs and upgrades performed on the property. Repairs and upgrades are fully deductible the same year they are executed.
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5
Report as a deduction any travel, gas, and wear and tear on the vehicle that was accrued as a result of responding to a tenant's complaint or needs or accrued as a result of errands relating to the rental property.
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Report costs accrued because of a home office that affords the opportunity to conduct business pertaining to the rental property. For example, report costs of a fax machine or home computer, or office space.
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Report deductions for any insurance premiums paid on any aspect of the rental property. Any flood, fire and property insurance relating to the rental property may be deducted from the tax report.
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Tips & Warnings
Maximizing deductions for rental property may be easier by employing the services of a certified public accountant, which could also be used as a tax deduction.
Keep every receipt and canceled check in case you are audited.
