Owning a property or a community association is a great investment. The best part is that it comes with a huge variety of tax deductions, so that much of what the landlord spends on the property can be recouped. Check out these five popular tax deductions for landlords.
Interest related to the property is one of the largest tax deductions for HOA landlords. Not only can they deduct the mortgage loan interest, but they can also deduct any interest from loans used to improve the property, as well as credit card interest (if the card was used to purchase items for the property) and mortgage points. However, if the association owner takes out a loan for the property but doesn’t actually spend it, that interest cannot be deducted. The money has to have actually been spent.
As time passes, items lose their value, but landlords and associations can recoup some of this loss come tax time. The structures, the value of improvements, and equipment all depreciate and that depreciation can be used as deductions. However, the amount must be spread out over multiple years. It can’t be claimed all at once.
Repairs and Maintenance
Repairs and regular maintenance are part of owning a property, but they also pose a great tax break. All costs a landlord spends on repairs and maintenance can be deducted. This includes costs for painting, plumbing repairs, fixture repairs, landscaping, HOA dues and assessments, light bulbs and just about anything else.
For just about all the insurance a landlord has for their rental property, the premiums can be deducted. This includes homeowners insurance, mortgage insurance, flood insurance, theft insurance and liability insurance. However, it also includes personal umbrella insurance if it also protects the rental property, general liability insurance and any insurance for employees of the property, such as workers’ compensation and health insurance.
Travel expenses related to the property are also covered. This includes both long distance travel and local travel. Many landlords don’t live near their property, so costs like airline fares, hotels, car rental and some meal expenses are covered. However, even if the landlord does live near the property, some local travel costs are covered, including gas and repairs.
The more tax deductions a landlord takes advantage of, the better the investment. While there are significantly more deductions a landlord should consider, these are some of the best to save money.
The list of AssociationVoice’s integrated accounting options can help make filing taxes a breeze.