Tax Benefits Available0through Investing In Rental Property

Tax Benefits Available0through Investing In Rental Property



Tax Benefits Available through Investing in​ Rental Property
Much of​ the​ country recently has experienced a​ weakening in​ the​ local real estate market .​
If that is​ the​ case in​ your local area,​ now may be an​ excellent time to​ make the​ decision to​ invest in​ rental property .​
Investment real estate provides exceptional tax benefits which can a​ good deal,​ a​ great deal .​
If you​ already own a​ home you​ may be quite familiar with many of​ the​ tax benefits offered by owning rental property .​
For example,​ by using a​ mortgage to​ purchase rental property you​ very well may be able to​ write off your interest payments on​ your taxes .​
In addition,​ you​ can tape into tax benefits which you​ may not already be aware of .​
Many rental property owners find that they can deduct a​ great many of​ the​ expenses incurred in​ the​ maintenance of​ the​ property .​
This includes such as​ items are repairs,​ utilities and insurance as​ well as​ much more .​
In the​ event you​ make the​ decision to​ hire a​ rental agent or​ a​ property manager,​ you​ will also have the​ benefit of​ writing off any fees paid for those services as​ well .​
Depreciation deductions can also frequently be written off .​
In fact,​ depreciation is​ frequently one of​ the​ best tools available to​ owners of​ rental property due to​ the​ fact that it​ provides you​ with the​ opportunity to​ essentially write off the​ largest expense associated with owning and operating rental property-the price for the​ property itself excluding the​ land .​
It should be noted that depreciation does take place over a​ period of​ time .​
For residential rental property the​ time schedule is​
27 ½ years while commercial property is​ depreciated over a​ period of​ 39 years .​
This means that if​ you​ paid $150,​000 for a​ rental property (less the​ value of​ the​ land),​ the​ annual depreciation would be approximately $5,​000 .​
You can also frequently include property improvements in​ your cost basis and depreciate them over time as​ well .​
Repairs can typically be deducted during the​ year in​ which they occurred .​
Not sure whether something classifies as​ an​ improvement or​ repair? Keep in​ mind that improvements will add to​ the​ property’s value and prolong the​ life of​ the​ property while a​ repair is​ intended to​ keep the​ property in​ good condition .​
It is​ also important to​ remember; however,​ that landlords are not able to​ assign a​ value to​ their own labor and then deduct the​ cost of​ it .​
Many landlords are also able to​ deduct the​ cost of​ travel,​ whether it​ is​ driving or​ flying .​
In the​ event the​ travel is​ not local,​ you​ also have the​ advantage of​ being able to​ deduct such costs as​ hotel bills,​ airfare and part of​ the​ costs of​ meals .​
If you​ choose to​ operate a​ home office in​ order to​ manage your rental property,​ you​ may also be able to​ deduct specific expenses such as​ part of​ your homeowner’s insurance,​ utilities and home mortgage interest .​
In order to​ qualify for this tax benefit,​ the​ space assigned as​ your home office must serve as​ the​ primary place of​ business where you​ handle matters regarding the​ operation of​ your rental property .​
In essence,​ the​ home office area must be used exclusively for business and not for any other purpose .​
You do not necessarily have to​ assign an​ entire room as​ your home office; however,​ as​ long as​ you​ can assign a​ part of​ the​ room that is​ definable as​ your home office .​




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