What type of tax exemptions are available for property managers? Each and every year, landlords or property managers pay more than they have to on their taxes. Why? This is in large part because they don’t maximize all of their possible exemptions. From fixes to rental properties to travel to and from homes or apartments that they own, so many exemptions are glossed over, and don’t get included on a tax return.
Forrest Rose of Grey CPA’s (www.greycpas.com) in Windsor, Colorado lists the top 8 tax exemptions that property managers can claim yearly on their tax returns.
1. Interest. This is an easy one, but needs to be reinforced by an accountant, as it’s the largest deduction on a property manager’s ledger. Any interest on the acquisition of a rental property, or continued interest on mortgages or loans can all be applied as a deduction.
2. Repairs. Examples of repairs can be fixing a leaky roof, or interior and exterior painting of a home or condo. Broken windows, faulty gutters, and broken down concrete are also good examples of repairs that can be claimed on a return.
3. Local and long distance travel. You most likely drive to and from your properties on a consistent basis. Any mileage that you travel in your car, gasoline or any expenses incurred by local travel can be expensed against your taxes. For long distance travel, airfare, meals, hotel stays, and other expenses closely related to your properties can be claimed. Overnight stays at hotels are scrutinized by the IRS, so be cautious about your long distance travel expenses.
4. Depreciation. Landlords cannot deduct the full cost of a property like a single family home, apartment or commercial property during the year in which you paid for it. Rather, property managers are allowed to deduct portions of the property’s depreciation over several years. Ask your accountant for more details, as this can get tricky.
5. Insurance. Any insurance that you pay for on your rental properties such as fire, theft, flood, and various others can be deducted on your tax returns. Also, certain insurances that you pay for your employees that work on your properties such as workers compensation can be deducted.
6. Employees and contractors. Any wages that you pay to contractors or employees while they are working on fixing your properties can be used as a deduction.
7. Legal or other Professional services. The money that you pay an accountant to file your business tax returns can be a deduction on your taxes. Speak with an accountant to learn more about what services can be deducted.
8. Lastly, any home office costs (there are some minimal requirements) can be deducted from your taxes. Not only your home office, but any working space that you use such as a shop can be used as a deduction.
If you have any questions about possible deductions, contact a professional, certified tax accountant.