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Rental Income Tax Deductions and Strategies
by Manuel Lopez

Many real estate investors are particularly attracted to the rental industry because of the rich tax advantages found in the tax code. Uncovering these benefits is crucial to the profitability of any rental business. These are some deductions and strategies to help you maximize your profits.


• Depreciation Deduction - The actual cost of your rental property is deducted over 27 years, not all at once. The appliances in your rental property are also deductible but you must have accurate purchase receipts to properly. Not only are the costs deductible, the interest paid is also deductible.

• Property Improvements Deduction -Improvements to your property such as new landscaping, room additions or adding porches are deductible.

• Repairs Deduction -General repairs such as fixing broken pipes or windows, repairing drywall, painting and changing carpet are completely deductible.

• Casualty Losses Deduction -You can deduct the cost loss or damage of theft, fire, vandalism, flood and other acts of God.

• Contributions to Charity Deduction - Make sure you keep you receipts for all contributions to charity. No matter how large the contribution, small contributions add up to a considerable amount over the course of the year.

• Interest Payment Deduction -Mortgage, general loans and credit card interest payments are deductible. This deduction is generally one of the largest in a landlord’s portfolio.

• Anticipated Profit Strategy - If you determine that your business will have a profit, try prepaying some of the following years’ expenses. You will be able to deduct the expenses on this year’s return. You might also purchase anticipated additional equipment; your business can gain an immediate 50% depreciation. Buying this equipment this year can lower taxable income. Other expenses to accelerate include prepayment of taxes, office supplies, insurance, and utilities.


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