There’s really no secret as to why real estate is the wealth building tool for serious investors worldwide. Equity, cash flow, appreciation, these are the staple benefits of proper real estate investing strategies and the catalyst behind its wealth building effects. It’s also true that there are other valuable effects of proper real estate investing available to prudent portfolio owners that can take returns to another level entirely.
Did you know that rental properties offer tax breaks at both the state and federal level? In addition to the standard deductions for mortgage interest and property taxes, investors can also deduct depreciation on their rental homes. This can add up to big savings come tax time!
Of course, it’s important to consult with a tax professional to ensure that you’re taking advantage of all the tax breaks available to you. But if you’re looking for an investment that can offer serious tax advantages, rental properties should definitely be on your radar. In this post, we’re covering some of the best tax advantages and deductions for real estate investors.
The IRS considers rental homes to be depreciable assets. This means that investors can deduct a portion of the cost of their property over time. The current depreciation schedule for residential rental properties is 27.5 years.
Starting a rental business allows investors to deduct a portion of many of the start-up costs including office equipment, research costs and accounting fees.
Any costs associated with advertising your rental homes, including online listings and print ads, are tax deductible.
The cost of insurance your rental properties can be deducted from your income.
Landlords are able to deduct the cost of utilities if they pay for them in their rental properties. This can be for utilities paid for a tenant, or utilities used in common areas or amenities.
Internet and Cell Phone
Any internet or cell phone costs associated with your rental business are tax deductible. This can include the cost of a dedicated business line or data plan for your rental property.
Repairs and Maintenance
The cost of repairs and maintenance to your rental homes is tax deductible. This includes both preventive maintenance and necessary repairs.
If you travel for your real estate investment business, the cost of travel is tax deductible. This can include the cost of airfare, car rental, hotels and meals.
If you use a professional service for your rental business, such as a property management company, the cost is tax deductible.
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