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Taxes Information |
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Rental Property Tax Deductions
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 Chapo is CEO of http://www.businesstaxrecovery.com - Obtaining tax refunds for small businesses by finding overlooked tax deductions and credits through a free tax return review.
MORE RESOURCES: Those who oppose higher taxes and are fed up with record levels of U.S. debt may pine for Ronald Reagan, the patron saint of lower taxes and smaller government. WASHINGTON — Raising taxes on the wealthiest Americans, as President Barack Obama proposes to do, probably wouldn't wreck the moribund U.S. economy, but extending the tax cuts they've enjoyed since 2001 could spur some economic benefit. Taxes go downSeveral letters have complained about property tax increases. However, we are having the opposite experience: Our home's assessed value decreased by about 30 percent, and our taxes will come down almost 20 percent if no budget change is adopted, and 30 percent if the proposed change is adopted. School taxes go up for Palm Beach County residents despite cuts to budget The average area homeowner could pay $127 more in school taxes this year if the Oshkosh Board of Education raises local property taxes to the maximum allowed by the state the school board is expected to discuss its options tonight, but take no official action. DECATUR - Raising taxes is the only way out of the state budgetcrisis, and members of the General Assembly know it. ANALYSIS-Transaction taxes, liquidity and patience A combination of high foreclosures and rising property taxes put the squeeze on homeowners... and local governments. Contributor: David W. Thornton Published: Sep 07, 2010 Levying property taxes to affect housing prices is not the best option given other countries' experiences, according to a researcher from the People's Bank of China. LANCASTER -- The former home of a local hardware store will be on the auction block Friday, paving the way for government officials to collect $88,530 in back taxes. |
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