Rental Property Tax Deductions


Visitors: 2,522

Own residential rental properties? This article discusses how income from those properties impacts your taxes.

What Constitutes Revenue?

Generally, rental income is defined as any revenue you receive from the occupancy or use of residential property. Rent, obviously, is included in that revenue. Many owners are surprised to learn revenue also includes rent advancements, expenses paid by a tenant and any security deposits not returned to the tenant. In fact, revenue can also include amounts paid to cancel a lease, even if you had to sue the defendant to get it.

Yeah, Yeah, But What Can I Deduct?

Tax deductions associated with rental properties are strikingly similar to those found in any business. Technically, you can deduct any expense reasonably necessary to “manage, conserve or maintain" the property. Obvious deductions include mortgage payments, cleaning expenses, insurance premiums, service payments such as landscape maintenance, repairs, maintenance, etc. Overlooked rental property deductions include:

1. Expenses incurred in finding tenants,

2. Commissions paid to third parties that arrange for tenants,

3. Paying your accountant and/or lawyer,

4. Mileage for driving to and from the property [I said, “No more parties!"]

5. Depreciation of the property,

6. Depreciation of items in the property such as washing machines, furniture, etc.

Imaginary Rent Deduction

A few creative property owners have suggested that they should be able to deduct their customary and standard monthly rent if the property is empty. The argument goes, “If the property is empty, I am not making revenue and should be able to deduct the $1,500 that I am missing out on. " At first glance, this almost makes sense. Sadly, it doesn’t fly from the perspective of the IRS. Since you are not receiving revenues, your total revenues for the year will be reduced by the loss rent. You can’t double dip by deducting the $1,500 from the already reduced yearly revenues. The only things you can deduct are the expenses you incur during this period, and only for so long as you are actively trying to rent the place.

Rental properties are a great investment. Even more so if you stay on top of your taxes.

Richard A. Chapo is with - providing information on taxes . Visit us to read more articles about tax deductions and our new tax help page.


Article Source:

Rate this Article: 
Top 10 Tax Deductions
Rated 4 / 5
based on 5 votes

Related Articles:

Income Tax Deductions Relating to Property Transactions in Asturias

by: Steve Mcgrath (August 24, 2011) 
(Finance/Taxes Relief)

What Are The Advantages Of A Rental Property Tax Deduction?

by: Mike Singh (September 08, 2006) 

Free Tax Deduction Maximizer Turbo Charges Tax Deductions Online

by: FrankW Ellis (January 02, 2007) 

Get More Tax Refund Money Using Income Tax Deductions and Credits

by: FrankW Ellis (December 22, 2006) 

Tax Relief - Tax Deductions for Charity Donations

by: Noreen Centeno (April 22, 2008) 
(Finance/Taxes Relief)

Tax Deductions

by: Steve Valentino (June 28, 2006) 

Tax Deductions - Mr. C.P.A. Can I Deduct a Pizza? You Too Can Deduct Your Fun ..

by: Drew Miles (June 20, 2005) 

10 Most Overlooked Tax Deductions

by: Zerry Xu (March 10, 2011) 
(Computers and Technology)

When Can I Estimate My Tax Deductions?

by: Paul Mahalick (July 16, 2008) 
(Finance/Taxes Relief)

Top 10 Tax Deductions

by: Barry Allen (June 01, 2007)