Income tax returns for rental property owners can be complex. There are many expenses that property owners can deduct on their tax returns, but there are many others that you cannot legally claim. Additionally, under the 2017 Tax Cuts and Jobs Act, deductions for rental property owners have been currently reformed and modified. These modifications denote that you may or perhaps may not need to keep a record of certain expenses, primarily those that are no longer allowed. Researching and learning about whatever tax deductions you cannot have as a Loveland rental property owner can possibly simplify your income tax return preparation.
The first rule you must learn regarding deducting expenses is that you cannot deduct expenses you didn’t actually pay for during the tax year. For example, if you appointed anyone to resolve the problem with the plumbing in your rental home in December 2019, but didn’t actually pay for the job until January 2020, you would need to wait and deduct the cost of the repairs on the 2020 tax return.
- Mortgage payments for your rental properties. Although mortgage interest and property taxes are both deductibles, each and every payment made toward the loan principal is not.
- Entertainment expenses, even if your entertaining is within the context of your business. But, business meals are still deductible, hence the limits have changed under the new law.
- Business gifts valued over $25 and given to anyone during the tax year.
- Club dues, including memberships to gyms, country clubs, or other clubs, even if you are receiving guests there for business reasons.
- Capital improvements, as an example, installing new windows or a new roof on your rental house. These costs must be depreciated, not deducted.
- Other taxes, including state income taxes and local sales tax. These may be included in your personal income tax return.
- Fines and penalties, such as those levied by the IRS for underpayment of a prior year’s taxes and late payment fines.
- Political contributions, additionally, everything used on lobbying costs or campaign events.
- Home office space provided is utilized exclusively for business purposes. Indeed, even keeping a family computer in the room may surely mean that your home office deduction is disallowed.
In the long run, income tax deductions are burdensome and are really tedious to understand. A tax professional is the most suitable source of information on every tax-related issue and question, but there are things you can surely do to indeed maximize both your time and your earnings. If you appoint and work with Real Property Management Colorado, we will help you deal with the oftentimes confusing terrain of tax deductions with the result that you do not, by any means, have to ask whether you are keeping track of the right items.
Our team of Loveland property managers can provide you with the support you need to ensure that each potential tax deduction is taken while avoiding disallowed items that will cause problems with the IRS. With our assistance, you could become absolutely sure you’re readying yourself up for accomplishment and success both during tax season as well as throughout the year. Contact us online or call us at 970-400-7368 for more valuable information.
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