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What you write off against your rental income
Are you reaping the full benefits of your rental property? Whether you currently own a rental property or are considering one as an investment, here are some income tax write-offs you deduct from your rental income:
- mortgage interest — when you have a mortgage on your rental, you deduct the accrued interest you pay from your rental income;
- ordinary and necessary expenses — costs incurred to maintain and manage your property are deducted from rental income including maintenance, repairs, insurance and advertising;
- property taxes —deduct those fully from rental income; and
- depreciation — expenses do not include the cost of renovations to upgrade income property beyond its original condition. However, you do recover upgrade expenses after depreciation deducts from your rental income.
When you sell your rental property, get advice on §1031 property replacement plans. §1031 plans allow you to avoid capital gains taxes as profit when you properly handle the net sales proceeds and acquire a replacement income property.
Are you interested in talking more about buying or selling income or business-use property? Contact me for more detailed information!
My situation involves a specific tax rule regarding capital improvements that the article did not address. This differs from the general overview provided in the text.