As a landlord keeping accurate records is essential for any landlord’s peace of mind, tracking your monthly rental income and expenses is an essential part of effectively managing your rental property and getting the most out of your investment.
There are several regular expense deductions that you need to track, such as depreciation, mortgage interest, and pass-through taxation.
The volatility of the market in past years has essentially changed the way investing should happen.
However, not every expense is routine. Many will be one-off or otherwise irregular expenses. For example, maintenance or management costs. These expenses can build up over the course of the year to make up a sizeable chunk of your deductible expenses and they must be properly recorded with associated receipts as proof to claim these expenses back at the end of the year.
Before you look at any property, you need to compile a checklist of all expenses, and potential ones, that you may encounter.
Expenses You Need To Track
- Interest: The interest on your mortgage or credit card payments is tax-deductible.
- Depreciation: You can deduct the price of the property against your taxes over the course of 27.5 years
- Travel: Travel expenses conducted for the sake of your rental property management can be deducted.
- Repairs and Maintenance: Maintenance work done on your property along with any necessary repairs are deductible, however, it’s important to note that expenses that are deemed “improvements” to the property are not.
- Personal Property Used in the Rental: For example, whiteware, furnishings, or tools.
- Insurance: It’s important to have proper coverage to protect yourself from potential incidents such as fire, theft, or even lawsuits. These necessary expenses can be reclaimed at the end of the year.
- Property Management Costs: Costs like the Landlord Studio app which are for the running or management of your property portfolio can be deducted.
- Pass-through tax deduction: The pass-through tax deduction lets U.S. taxpayers deduct as much as 20% of their business income that comes from “pass-through” entities such as LLC’s.
- Employees and Independent Contractors: You can deduct wages of aunty full or part-time employees hired to help you manage or run your property portfolio.
- Legal and Professional Services: Accountants, attorneys, or other professional help.
Every landlord needs to find their own way of managing their rental property expenses. You’ll want to find a way which works for you.
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