If you own residential rental property, one of the key benefits for you may be the regular incoming cash flow that you receive. In addition, if you carry a mortgage on the property(ies), then it can also be beneficial to have your tenants essentially pay that balance down, which in turn can build up equity for you.

There are also a number of nice tax-related benefits that can come with owning rental property, including:

  • Mortgage interest tax deduction
  • Tax deductions for other expenses related to the rental property business, such as travel, marketing, and property maintenance and repairs
  • Depreciation

Those who generate rental income typically report this cash flow on IRS Form 1040 or 1040-SR. But when preparing your annual income tax return, it is essential that you not only report your tax deductible items, but that you also have on hand the proper records to back them up.

For instance, according to the IRS, rental property owners must be able to “substantiate certain elements of expenses to deduct them.” This means that you should have documented evidence that such costs were incurred, like:

  • Receipts
  • Bills
  • Cancelled checks

For many real estate investors, these are the same types of records that you will use for monitoring your properties’ activity, as well as for preparing your financial statements.

Keeping track of the income and outgo from your real estate investments could become somewhat time-consuming – especially if you own several homes or units. That’s why it can help if you work with an experienced property management company that offers you easy-to-access monthly statements (as well as access to past financials) to help with your overall recordkeeping.

If you own residential rental real estate in the Orlando and/or surrounding Central Florida area and you would like to learn more about our services, please feel free to call (407) 279-1876 or send us an email by going to https://incentivepm.com/contact-incentive-properties/. We look forward to assisting you.

Tips on Rental Real Estate Income, Deductions and Recordkeeping. IRS. https://www.irs.gov/businesses/small-businesses-self-employed/tips-on-rental-real-estate-income-deductions-and-recordkeeping