Filing your income taxes as a rental property owner is a little different from filing as an individual. You essentially own a small business, and your taxes will be higher for that reason. Fortunately, there are a few different ways you can reduce what you’ll have to pay to the IRS.
Start With Deductions for Property Repairs
You can start to get more out of your taxes by remembering to deduct your repair costs. If you have paid out more than $600 in a 12-month period for professional repair services, you can deduct those expenses on your income tax form. Be sure to keep receipts in case you’re asked to verify your repair expenses.
Don’t Forget Your Home Office
It pays off to use a room in your own home to manage your rental property. As long as you use this room solely for this purpose, you can deduct a portion of your rent or mortgage as a business expense. Be sure your home office is not used for recreation or other purposes, or you may be disqualified from using this deduction.
Add More Revenue Sources
You can increase your income potential by adding amenities and services to your rental property. Consider investing in coin-operated laundry machines, snack and beverage vending machines, and other money-making opportunities. You can also offer services, such as landscaping services, to your tenants. Charge a few dollars over the fee charged by the landscaping service to help you make these services more profitable for you.
Use Schedule-C to Your Advantage
When you file a schedule-C form for your taxes, you can make even more deductions. Under this tax filing method, you can deduct expenses associated with any tasks you perform in the management of your property. For example, you can deduct the gas and mileage used to deposit rental income or to drive to your rental property. You’re also allowed deductions for time spent hanging rental vacancy signs, buying supplies for the property, and performing similar tasks.
If you’re unsure about the deductions and incentives that are available to you, talk to an accountant or tax attorney. A professional can help you prepare your taxes correctly. Additionally, they may know of new tax breaks that are available to you since they will keep up with how tax laws change from year to year.