If your rental property is not turning the kind of profit you would like or if it is causing you losses, then it may very well be that you are not taking advantage of all the tax deductions that are available to you as a rental property owner. Using your deductions may make a real difference when tax time comes around, so take a good look at whether you are using deductions and what deductions you are actually claiming.
Many rental property owners know that their deductions such as repairs have to be necessary, ordinary and reasonable. You can repaint, fix the floors, replace broken windows and then claim the deductions. A wide range of other deductions exist within this definition and you have to know what they are.
You may already know that you are allowed to deduct expenses for local travel when you go to and from your rental property. You can take your deduction one of two ways. You can use the standard mileage rate, which was set at 55 cents per mile for business miles driven on January 1, 2009 or you may want to deduct actual expenses such as fuel, upkeep and repairs. In this regard, you would have to decide which deduction is best for you.
Many landlords are aware of the above, but many do not know that you can also claim long distance travel if going to your rental property means traveling overnight. Long distance travel deductions include meals, airfare and hotel expenses. Careful planning may even allow you to mix your visit to your rental property with a little pleasure, while taking a deduction. However, IRS auditors are known for taking a close look at overnight travel expenses, so you have to make sure that all of your records are in order if you are taking an overnight travel expense deduction.
In fact, good record keeping is a must if you are going to be taking any deductions. At any rate, the single biggest deductible expense for a landlord is often interest. There are a few examples of interest deductions such as mortgage interest on the loan used to buy or improve your rental real estate and credit card interest for services or goods that were used in your rental business. Interest can really add up in a year and you can deduct whatever corresponds to your rental property.
You can also deduct any insurance premiums that you pay for just about any insurance on your rental property. These premiums can include flood, theft and fire insurance payments for your rental property and your liability insurance as a landlord.
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