Rental Property Checklist for Taxes


As a landlord, you are probably aware that you must claim the amount of rent paid to you as income when you file your taxes each year. If you are new to the rental business be mindful that deductions are available to help offset your rental income. Keep a rental property checklist of your expenses throughout the year; the amount of money you can save when you file your federal taxes is typically worth the extra effort.

Mortgage Interest

Unless you have made renovations or improvements to your rental property during the year, the interest you paid on the mortgage is typically the biggest deduction allowed on a rental. Watch your mail in January or early February for a tax document (1098) from your mortgage company with the interest amount that you paid for the previous year. Be aware that this information is sometimes included on the monthly statement or with the monthly statement instead of arriving in a separate envelope.

Settlement Statement (HUD-1)

Provide a copy of your settlement statement to your bookkeeper for all properties you purchased during the tax period you are working on. Since the actual cost of the property is not fully deductible during the year you purchased it, your bookkeeper will depreciate the property over several years. She will use the settlement statement to get the initial figures that will then be used to calculate this depreciation.

Repairs and Cleanup

Keep receipts for repairs and cleanup costs that were spent on the property during the year. You can fully deduct the costs it takes to repair items, such as broken windows or leaky faucets, as well as the payments for carpet cleaning and rental cleanup if the property becomes vacant and needs maintenance before you can rent it again.

Mileage Deduction

Although the amount of travel expense you can deduct will generally vary from year to year, it is still a business expense that landlords should keep up with. Travel for rental activity can include visiting your tenant, trips to purchase repair supplies or even visits to the courthouse if you must file for a dispossessory. Once you are established as a real estate investor, you may also deduct the mileage traveled as you search for other rental properties.

Other Expenses

Include utilities paid when the property is vacant, lawn keeping (when not maintained by the tenant), as well as the advertising you use to find your tenants. Property insurance, claims against losses or damages and legal or bank fees are also items you can often deduct. You may also wish to discuss with your bookkeeper if you meet the requirements to claim a home office for your rental business.

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