Property Owner Tax Breaks

Taking Advantage of Landlord Tax Breaks

Tax breaks available to a landlord are significant benefits of owning rental property. However, many landlords either ignore, or are unaware of, these deductions and do not take full advantage of them. Rental property is one of the best investments you can make in terms of tax benefits, which include much more than the benefits you may associate with owning your own home.
A good accountant or tax attorney can help you find these deductions and make sure you are receiving all the tax benefits you deserve as a landlord. It is to your benefit to have a basic knowledge of the tax rules regarding rental property and keep good records. The most significant tax breaks a landlord can take advantage of include:
Insurance costs
Management costs
Repairs costs
Travel costs


Q. How does depreciation on my property affect my taxes?
One of the most attractive tax advantages of owning rental property is your ability to depreciate the cost of a residential building over 27.5 years. You can depreciate the property even if it is increasing in value. For example, if you paid $100,000 for the property (not including the land), the annual depreciation would be $3,636. This means you can have a positive cash flow up to that amount without owing any income taxes. This can be especially beneficial if you own more than one rental property.
Q. What happens if I am making a profit on my rental property?
One of the reasons you became a landlord might have been the income you can make on your rental property. Once that income exceeds your deductible expenses, you are making a profit that can be taxed. If passive losses carryover from earlier years, you can use them to offset your profits and postpone the tax hit.
Q. What types of interest can I deduct?
Besides mortgage interest, you can also deduct interest on loans to make improvements to your property. You can also deduct the interest on credit cards used as part of your rental activity.