Rental Property Management: The Skinny on Tax Deductions

Posted on January 10, 2019

Get the skinny on rental property management tax deductions to maximize profit and stack that paper. By the way, this is for investment property, not your primary residence. That’s something else entirely in the jungle of tax returns, as far as this post is concerned anyway.

That said, are tax deductions less than enthralling? Yes. Do you need to know them? Yes. That’s why we at TenantEvaluation are compensating for such tedious subject matter with “dope” slang and “wowza” language.

“Wowza.” Maybe we don’t know slang very well. But we do know rental property management, and we know it well. Sit back, buckle up, and get ready for the ride of your life exploring the fascinating world of tax deductions. Not because it’s interesting, mind you, but because it puts money in your bank account, and what’s more interesting than C.R.E.A.M.? Just ask Wu-tang (maybe that reference is a little outdated too). Let’s go:

Mortgage Interest-The Phattest Deduction

The vast majority of landlords have NOT paid down the majority of the mortgage, meaning they’re still paying the interest, not the principal. That means you have not paid off of any of the property yet, you have only given money to the bank.

That sucks. And we know it sucks. But you know what sucks so much less? Not ALL of that interest has to be considered a loss. In fact, you can deduct the interest paid, which is HUGE for savings.

By the way, you can also (maybe) deduct the interest paid on a business credit card that was used for home maintenance and or services. When considering the astronomical interest rates on the majority of credit cards, this translates to *cha-ching* in a big way.

Travel Expenses as per Rental Property Management

Oh yes, travel expenses. Just like your one friend who’s an “independent contractor” and seems to write off every mile traveled and meal eaten as a “business expense,” you too can deduct travel from your taxes as a rental property management extraordinaire. For the record, do not put “rental property management extraordinaire” on your tax return. That will only cause confusion.

But yes, you may very well be able to deduct the expenses traveling to and from the property in question. Many savvy taxpayers claim the number of miles put on their car traveling to and fro on their return, and then save cash per mile.

However, that’s just for short distance. If you also travel long-distance, you should deduct things like airfare and hotel expenses as well. Keep in mind you should be able to prove said costs were for a business trip should anyone (the IRS, cough cough*) ask.

Insurance Premiums

Unknown and under-appreciated, insurance premiums slip under the radar of most landlords but represent a fantastic opportunity to keep Uncle Sam from dipping too far into your pockets. In fact, most landlords can generally deduct their ENTIRE insurance premium on their home, meaning the premium for not just theft, not just flood, but fire too.

Additionally, if you employ anyone who performs maintenance and service for you, you can deduct their premiums for workers compensation & insurance too. Know where your money is going and where it doesn’t need to go, ie Uncle Sam’s coffers.

Professional Service Costs

To expound on that last point, it’s not just workers comp and employees’ insurance you can deduct, it’s all types of services often inherent to rental property management. That means you can deduct the costs of plumbers, roofers, painters, lawyers, property managers, handymen, carpenters, electricians…you get the picture. Note this is only for services for your property, NOT personal services.

Home Office

Yep, yet another deduction to tack onto your tax return. If you work at home for things related to rental property management, you can claim it. This figure is based on how much of your primary residence is used for your business. This also applies to utilities in addition to your annual mortgage/rental payments.

That’s it! What can’t be expensed is your tenant screening service, but that shouldn’t matter because TenantEvaluation does that for free for landlords, rental property management companies, and brokers anyway.

In fact, TenantEvaluation conducts the nation’s most thorough tenant screening across the most comprehensive credit, criminal, and rental history databases available. It’s even backed by bank-level encryption, so your tenants feel safe while they apply online to the home of their dreams. Wave goodbye to identity theft, paper applications and wasted mula.

Save money on tenant screening and make money with tax deductions. You’re welcome.