Top Tax Deduction Secrets Every Property Owner Should Know
Are you a landlord or own property? Do you run a corporation that owns a property for your own use or rental purposes? Owning property comes with a legal obligation of paying tax. While paying tax is inevitable, property tax consulting to help you out is imperative.
Every financial year, thousands upon thousands of property owners pay more than they ought to. Did you know there are legal provisions that can allow you tax deductions, leaving more income in your wallet? Read through to learn and learn the five immediate tax deductions you can enjoy.
- Interest
The interest you earn is one of the biggest deductible expenses on your property. You qualify for mortgage interest tax deductible if you secure a loan to erect rental property. Mortgage interest is perceived as a business expense.
- Depreciation
Most property owners think that their property appreciates value with time. Whereas this may apply for land, property depreciates over time. Think of your business asset as a tool that decreases in value with continued use.
Your property loses value every year until the end of its useful cycle. You can factor in your property’s depreciation every financial year. Therefore, for subsequent years the tax return for the property is lesser every year you file returns. Talk to a property tax consulting provider near you to help you with the calculations.
- Property taxes
What is the worth of your property? Where is its location? These are critical questions a property tax expert will ask you to help find the tax amount you should pay for your asset. A tax consultant knows that they should deduct property tax on your rental property. Many property owners overlook property tax and lose millions they’d have saved.
- Improvements, repairs, and renovations
Typically, any property has recurrent expenditures incurred throughout the year. To maintain the status of the property, you spend on replacing bulbs, patching up holes and falling paints, paying for waste disposal, and so on. Whereas such expenses may seem minor, they qualify for tax deductibles the financial year you incur the maintenance expenses.
A tax expert can help you capitalize the deductible as part of the initial expense while purchasing the property. Most property owners misclassify repair expenses on tax returns and raise eyebrows with the IRS. Additionally, if you have high figures for repairs or maintenance on annual tax returns, the IRS interprets it as the capitalized amount on a relatively insignificant property,
Here is a list of items that must be capitalized:
- Insulation works
- Roof replacements
- Security systems
- Additions and improvements of the existing structures
- Water heaters
- Flooring and walling
- Heating and A/C systems
Other property expenses
A tax consultant knows taxation rules, regulations, exemptions and can help you save on your income. Their expertise can help you know that the following are deductibles;
- Advertising and marketing the rental units
- Insurance for various aspects of the rentals
- Utilities such as water and energy
- Transportation expenses related to servicing, managing, and maintaining the
property.
A tax consultant is a critical partner for any landlord who wants to maximize profit and reduce unwarranted tax payments.
Comments are closed.