Those who own rental properties must include rental income on their taxes every year. But did you know that owners can also often claim a number of tax deductions based on the expenses tied to their rental properties? Knowing what deductions you might qualify for can help you save significant money every year if you have rental properties, provided you know which items can be deducted at tax time. Let’s take a look at some of the tax write-offs that you may not include – or even know you’re eligible for – when filing your annual return.
Did you have to advertise one or more of your rental properties last year? If so, you can deduct the full amount of it on your taxes. It can be pretty costly to put an ad for a vacant property into a number of newspapers for a month or two, so don’t forget to use the cost associated with it as a deduction. Advertising costs are directly relevant to your rental operations, so you can claim the full amount spent on your taxes.
No doubt you carry an insurance policy on your rental home, especially since it can protect you from anything that can happen – whether a natural disaster or tenant-caused damages. While your insurance premiums can cost thousands of dollars every year – or more, depending on the specific type of rental property you manage – it can be written off as an expense on your taxes. You may even be able to claim the full cost for your premiums if your rental property isn’t also your primary residence.
Your property taxes are paid annually to your local municipality, and while these taxes can be a significant cost, they can be a significant write off. Whether you live at the property and rent a portion out or rent the full property, your property taxes can be at least partially deducted from your annual tax burden. For example, if you live in a duplex with 50 percent of the whole home a rental unit, you can write off 50 percent of the property taxes. If you rent the whole property, you can deduct property taxes in full. However, it’s important to check with your accountant about writing off property taxes since there are some other factors you may need to consider when filing.
A final potential deduction comes in the form of utility bills. Do you pay for heat, water, cable or other utilities for some or all of your properties? A portion or even the total expense for those utilities can usually be written off. Paying for utilities at a property can make a property more appealing to a potential renter, and with the deduction available, it can even benefit you at tax time. If you rent the full property, you can deduct the full utility expense, while partial rentals – such as an attic apartment or renting out a single room – means you can deduct a fractional portion of these costs.
Are you a landlord who is confused about what you can and can’t write off on your taxes? Janet E. Helm & Co. Inc. can assist property rental owners in filing their taxes, including a review of their income and expenses to help identify all the possible deductions this tax season. Call us at 604-502-7705 today and set up a time to sit down with us.