Rental properties are extremely lucrative investments. If not for the constant in-stream of profit, then for the litany of tax benefits that seemingly rain from the sky for whatever expense the rental property accrues. In our previous blog, we talked about the tax benefits behind the employees and contractors you hire, as well as the interest that you can write off. Whether it’s on a mortgage, small business loan or even a credit card that you use to pay off all the repairs, which are also, coincidentally, pieces of interest that you can claim. Whatever way you’re interested in paying off the repair bill you can still write it off at the end of the year. On top of all of these benefits, there are even more expenses that are considered tax deductible.
Tax Deductible Travel
The IRS recognizes travel as a necessity to maintaining a rental. Thus, they provide rates for your mileage and the gas you spend getting to and from your rental properties. This includes the travel to the property for repairs and maintenance as well as vacancy showings and the gas to go out to the store to go out to get something for a repair. Had to take multiple trips to Home Depot to fix that leak under the sink? Don’t worry all of that gas and mileage is considered tax deductible. If your accountant seems doubtful even after you’ve shown the detailed mileage and gas log, mention Section 179, as it’s the specific article of tax law that details all of the rules that allows you to write off those expenses. You can even deduct flights if you needed to fly into town for a rental management issue or emergency. If you’re in need of a flight, be sure to keep really good records of why you were needed and the costs for the flight as the IRS will look much closer at that deduction that any of the other suggested deductions from our previous blog.
Write Off Your Insurance
If you invest in a rental, whether it’s using a small business loan or just a mortgage, you should always back that property up with insurance. If there’s a fire, theft or vandalism that’s still your property and the expenses to fix it will land on you if you don’t have it insured. Most of these insurances will provide compensation for employees with workers comp and other potential issues that would produce charges that would normally fall onto your shoulders. As a plus, you can deduct the amount you paid into insurance when you’re filing your taxes.
In the Event of an Eviction
Whatever legal trouble you have with a rental property, which will hopefully never happen, is covered. Any money you pay to evict someone or bring a charge to civil court with a lawyer is completely tax deductible. The lawyer fees you may collect during your ownership of a rental property includes contract drafting and any attorney representation you may be in need of. They’re considered “operational expenses” so you’ll need the receipts to prove the charges, but past that it shouldn’t be much more hassle than it’s already been.
Reach out to us if you’re interested in acquiring a loan to purchase a rental property and become a Dallas real estate investor. We believe in putting money into our local economy through entrepreneurs. Join us in our endeavor.