We are almost approaching the deadline of April 18th for the filing our tax returns. One of the important aspects of real estate investing is tax planning. Today I want to share with you some tax tips to help you minimize the tax bite.
1. Interest: This is often the largest deduction taken.
2. Depreciation: Not fully deductible the first year.
3. Repairs: Fully deductible so keep a running list of all repairs made.
4. Local Travel: Yes you can claim your travel to the property, even gas!
5. Long distance travel: If you own an out of area property hotels etc are allowed.
6. Home office: Offices must meet a minimum requirement but can be deducted.
7. Employees and Independent contractors: Anyone you hire to do work on the home.
8. Casualty and theft losses: Losses such as fire and flood are usually taken into account after Insurance.
9. Insurance: Premiums are deductible.
10. Legal and Professional Services: You can deduct your CPA fees incurred for rental property.
Tax planning is an aspect of your business that cannot be ignored and should not be trusted on inexperienced hands. Would you trust your local butcher with a open heart surgery? It is important that real estate investors seek professionals with experience in real estate taxation to assist them with their tax planning. Many times people fail in real estate investing, not because their ideas were bad but because poor tax planning.
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