Note: I am not an accountant or a financial expert. You must consult a certified tax accountant or attorney to determine if and how your rental property can benefit you during tax season.
I recently read an article about the tax benefits of owning rental property. The author was a mortgage broker who had interviewed a certified public accountant (CPA) who told her that “many investors don’t take advantage of the many deductions that are available for rental property.”
Honestly, I had always had a vague notion that rental properties were just barely worth it given the incredible hassle of keeping them up or the profits lost paying a management company to do so. Combine this notion with the popular marketing technique used by many gurus teaching flipping of belittling rental ownership as the way to wait as long as possible for your money, the way to stress and distress, and a good way to lose all family and personal time, and you can probably see why I had a general feeling – as I imagine many investors do – that rentals are just too much trouble.
However, when you look at the list of tax advantages that come with rental properties, it might be worth re-thinking. For example, did you know that depreciation deductions can allow you to take up to 25,000 dollars in losses per year, depending on your income? Frankly, that alone makes owning a rental property much more interesting, and might even make those infamous late-night phone calls a little easier to stomach.
In a market where the heaviest media coverage is focused on how many people are going to be renting in the years to come, it seems like now might be a good time to start reconsidering rentals. The writer also stated that other deductions include insurance, maintenance and repairs, real estate taxes, mortgage interest and utilities.
Thank you for reading the Bryan Ellis Real Estate Letter – your comments and questions are welcomed and encouraged!