Tax Deductable Expenses – Why an Investor Must Care

By
Real Estate Agent with The HBH Group (Keller Williams affiliate)

Rental tax deductions,investing in central Texas,tax benefits property investors,tax benefits property investments,real estate investmentsWhen you purchase property with the intent of renting or leasing that property to others, you have become a business person with a desire to make profit (or at least most investors want profit).  Rental tax deductions can become a critical part of your profit plan and can over the long haul, turn many poor-performing real estate investments from a loser into a winner.  You need to be intimately familiar with the tax codes and provisions in this area, or at a minimum, you should have a strong relationship with a tax professional who can advise you wisely.

Some of the areas regarding rental tax deductions where you should be knowledgeable are:

Improvements vs. Repairs/Maintenance:  Make sure you know the difference.  Repairs are deductable; improvements are depreciable - there is a BIG DIFFERENCE in the way these are handled on your return!  Talk to your tax professional to get this straight!

Home or Condo Owner's Association Fees: These should be deductable, but check with your CPA for sure.

Real Estate Taxes: Any state property taxes that you pay should be deductable.  Again check with a CPA or tax professional to be sure.

Other Acceptable Expenses:

  • Advertising in the newspaper for tenants and cost of signs
  • CleRental tax deductions,investing in central Texas,tax benefits property investors,tax benefits property investments,real estate investmentsaning supplies
  • Mortgage and other interest paid for the rental property
  • Cost of insurance-hazard, flood, fire, or liability
  • Payments for service such as lawn care, pest control, and trash collection
  • Payments for maintenance of the property
  • Professional fees for tax advice and tax return preparation fees for the part of the tax return dealing with rental property
  • Cost of new locks and keys as well as safety devices including smoke detectors
  • Commissions paid for finding tenants and/or property management services (be careful here as the rules can change based on what direct and indirect management of the property that you personally perform)
  • Cost of necessary transportation to and from the rental property for the purpose of maintenance, management, rent collection, picking up supplies, or checking the property (if you use your personal vehicle, either keep track of actual expenses and miles traveled or just the miles traveled)
  • Cost of renting equipment used for the rental property
  • Depreciation of the property (not including the land)
  • Depreciation of appliances, furnishings, and improvements
  • Any long distance calls associated with your rental property
  • The court costs for evicting a tenant
  • Legal fees pertaining to the rental property or tenants
  • Utilities
  • Expenses incurred when the property is not rented as long as you are actively trying to rent the property (even if you are renting it for the first time)
  • Having a home office used to manage your rental holdings (be careful here as this may flag you for and audit)

The HBH Group is an expert real estate team with extensive experience in Internet marketing, staging and creative financing.  Call us today for a no obligation visit to see how we can help you sell your home in this more difficult market!

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Our real estate team is connected to:

  1. Buyers and sellers of commercial and residential real estate.
  2. Investors in both the above classes of real estate.
  3. Property acquisution, leasing and management services for investors of commercial and residential real estate.
  4. Business brokerage to help you find and acquire a local business.

We would love to assist you as you invest in Texas and the greater Austin area.  Call us to find all we can offer you and to ask for a FREE information package!

This information is brought to you as a public service of the The HBH Group Realty Team with Keller Williams Realty. You can learn more about us at our websites located at: http://www.TheHBHGroup.com/ and http://www.TheHBHGroup.biz/ or contact our offices at (512) 439-3772 or toll-free at (877) 268-1877.

We teach a monthly real estate investment seminar in the Greater Austin area and YOU ARE INVITED to this FREE event. Simply call our offices to reserve you seats! Also ask about the investors club that we are forming in the North Austin markets currently - We would love to have you participate!

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Here are some other Buyer's Resources from Our Website: Seven steps to buying your home
Deciding how much house you can afford Making your home wish list Opting for new home construction
How can a real estate agent help me? 10 things you should ask a real estate agent
Location, Location, Location Mortgage Calculator Contact us about buying your home

And some seller's resources as well:Eight steps to selling your home
How can a real estate agent help me sell my home Practicing good seller's etiquette
How to price to sell and still make a profit Understanding the buyer Increasing your home's appeal
Mortgage Calculator Contact us about selling a property

The HBH Group/HBH Property Management
101 E. Old Settlers Blvd., Suite 190
Roundrock, TX 78664

To contact us:
Phone: 512-439-3772
Toll-Free: 877-268-1877
Fax: 512-579-4248
E-mail: info@TheHBHGroup.com
Websites: http://www.TheHBHGroup.com/
http://www.TheHBHGroup.biz/
Blogs: http://RoundRockRealEstateBlog.info/
http://www.RoundRockRealEstateBlog.com/

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Ambassador
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Gary Woltal
Keller Williams Realty - Flower Mound, TX
Assoc. Broker Realtor SFR Dallas Ft. Worth

Steve, what a tremendous list you have put together for the investor to remind them of the myriad of expenses that can be deducted. They can use your bulleted items as a checklist.

Aug 04, 2008 08:40 AM #1
Rainer
214,994
Lisa Friedman
Alliance Realtors - Bedminster, NJ
Central New Jersey Real Estate

Steve, that is a good comprehensive list of deductions. You know your stuff!

Aug 04, 2008 08:43 AM #2
Rainer
149,514
Steve Homer
The HBH Group (Keller Williams affiliate) - Round Rock, TX

Gary:  Being an investor myself for 20+ years has assisted me in knowing as much about the tax ramifications as I can!

Aug 04, 2008 09:09 AM #3
Rainer
149,514
Steve Homer
The HBH Group (Keller Williams affiliate) - Round Rock, TX

Lisa:  As I mentioned to Gary, being an investor and being wise enough to use qualified professionals to advise me, have taught me a lot about investing and the tax ramifications.  I wish someone could have provided me a comprehensive list like this 20 years ago!  Ah!  The information age!

Aug 04, 2008 09:11 AM #4
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Richard Weisser
Better Homes and Gardens Real Estate Metro Brokers - Newnan, GA
Richard Weisser Coweta Newnan Homes for Sale

Steve...

This is an excellent summary that I have bookmarked for future reference! Knowledge is the key to saving tax dollars!

Aug 04, 2008 09:53 AM #5
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149,514
Steve Homer
The HBH Group (Keller Williams affiliate) - Round Rock, TX

Richard:  Thanks!  Glad it could be a help to you!

Aug 04, 2008 10:01 AM #6
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