Top 20 Real Estate Tax Deductions
It’s crucial to be aware of the tax breaks available to you as a real estate investor so you can minimize your tax liability. The top 20 tax deductions that you might qualify for are shown below:
1. Mortgage interest: Those who invest in real estate can write off the interest they pay on loans used to buy or renovate rental properties.
2. Depreciation: For residential and commercial properties, respectively, investors may write off a percentage of the purchase price over a period of 27.5 and 39 years, respectively.
3. Travel costs: Expenses for travel to see their rental properties, such as hotels and food, can be written off by investors.
4. Repairs and upkeep: Investors may write off the expense of upkeep and repairs to rental properties.
5. Property management fees: Investors are entitled to a tax deduction for the expense of using a business to look after their rental properties.
6. Insurance: Those who invest in rental properties may deduct the cost of their insurance.
7. Legal and professional fees: Those who invest in rental properties are entitled to a tax deduction for their connected legal and professional expenditures.
8. Advertising: Investors are allowed to write off the advertising expenses of renting out their houses.
9. House office costs: An investor may be able to write off some of these costs if they use a portion of their home for their rental property business.
10. Energy-efficient improvements: Investors who make energy-efficient improvements to their rental properties may be eligible for tax rebates.
11. Capital upgrades: Expenses for making capital improvements to rental properties, such as upgrading a kitchen or bathroom, can be written off by investors.
12. Losses resulting from theft or casualty: Investors may deduct losses resulting from theft or casualty that are not covered by insurance.
13. Moving costs: If an investor moves closer to their rental property, they can write off their moving costs.
14. Points: Mortgage points for a rental property can be written off by investors.
15. Property taxes: Those who invest in rental properties may deduct the property taxes they’ve paid.
16. Investment expenses: Expenses relating to investments, such as real estate magazine subscriptions or investment seminars, may be written off by investors.
17. Landscaping and exterior upkeep: Investors may write off the price of landscaping and rental property upkeep.
18. Loan origination fees paid while getting a loan for a rental property can be written off by investors.
19. HOA fees: Investors are entitled to a tax deduction for HOA fees paid for rental properties.
20. Cost of finding a tenant: Those who invest in real estate can write off the price of advertising and other costs related to finding a renter for a rental property.
Note that this is not a comprehensive list, and it is always advisable to speak with a tax expert to see how these deductions apply to your particular tax situation.