Understanding rental expenses is crucial for landlords. These expenses can be deducted from your rental income and include costs like insurance, taxes, maintenance, and interest.
When you occasionally use your rental property for personal purposes, you need to divide your expenses between rental and personal use, which could limit your rental expense deductions. It's important to keep track of your personal use versus rental use.
If you co-own the rental property with others, you can only deduct expenses based on your percentage of ownership. Accurately calculating your share of expenses is essential.
Here are some of the most common rental expenses you can deduct:
- Advertising - expenses for advertising your rental property.
- Auto and travel expenses - expenses for traveling to your rental property for business purposes.
- Cleaning and maintenance - expenses for cleaning and maintaining your rental property.
- Commissions - expenses for hiring someone to help you find tenants or manage the rental property.
- Depreciation - expenses for the decrease in value of your rental property over time.
- Insurance - expenses for insuring your rental property.
- Interest (other) - interest expenses related to your rental property.
- Legal and other professional fees - expenses for legal or other professional services related to your rental property.
- Local transportation expenses - expenses for local transportation related to your rental property.
- Management fees - fees for hiring a property manager.
- Mortgage interest paid to banks, etc. - interest expenses paid on a mortgage used to purchase or improve your rental property.
- Points - points paid on a mortgage used to purchase or improve your rental property.
- Rental payments - payments made for renting out equipment or property related to your rental property.
- Repairs - expenses for repairing your rental property.
- Taxes - taxes related to your rental property.
- Utilities - expenses for utilities like electricity, gas, water, or internet provided to your rental property.
Understanding rental expenses is crucial to ensure you're maximizing your deductions and not paying more taxes than necessary. Consult a certified public accountant for specific tax advice related to your rental property. Happy renting!