Save Money on a Mortgage using Rental Property
August 9, 2008
If you own a property which you rent out then you need to make sure you know everything about the benefits that are available to you. There are a number of tax deductions which you may be suitable for. There are many benefits including payment to cancel the lease, expenses which are paid by the customer and of course rent.
Some common deductible expenses for your rental property include:
1. Interest ? Interest can be deducted which can include your mortgage payments which are used to either purchase the rental property or improve it. You can also deduct interest on credit card purchases which were used to improve the house. Interest is one of the biggest deductions which you can make.
2. Depreciation ? Everything depreciates including your rental property. From year two claiming depreciation is possible, you can continue to claim this for 27 and a half more years.
3. Repairs ? Any repair work such as tiling, fixing leaks, replacing storm window, plastering and repainting are fully tax deductable. You need to make sure you claim them back in the same year which you paid the money out. These repairs must be required and cannot include capital improvements.
4. Travel ? When travelling to your rented property you can reclaim the tax if you are travelling to talk to the tenants or do work on the property. You can also claim back the money spent travelling to shops to deal with problems with the house. Even if you have to travel a very long distance and use air travel to get there you can still reclaim tax. It is possible to be clever with this and reclaim some of the money for your personal trips.
5. Personal Office ? If you use a room in your house as a personal office for your rental business then you can deduct these expenses from your tax bill.
6. Losses ? It is possible to reclaim expenses due to losses which may be caused by fires or floods. It is possible to deduct all of this amount or part of this amount. It is important to note that this will depend on the level of interest that you have.
7. Insurance ? It is even possible to deduct the premiums which you pay to insure your rental property. This includes any sort of insurance policy including ones for fire, flood and theft. This also includes landlord liability insurance.
8. Services ? Any fees which you pay to anyone to do with your rental property is deductable. These include fees which are paid to accountants, property management firms, and attorneys.
There are a number of other expenses which are not tax deductable. These can include a loss in rental income because of a vacancy, room addition renovations, adding new appliances and any major structural changes to the house.
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