Owning and managing rental real estate can be a lot of work. It can also require many out-of-pocket expenses, such as a monthly mortgage, maintenance costs, and property management fees. But even so, the regular income – plus a number of favorable tax advantages – can make it more than worthwhile…starting with the deductible mortgage interest.
While the new tax laws now limit mortgage interest deduction to the first $750,000 of debt, this does not apply to real property that generates rental income. In this case, there is no maximum limit on the mortgage interest expense that you may deduct.
You may also deduct costs that are considered to be business expenses. These can include repairs and property management (provided that these items qualify by the IRS as being necessary and reasonable), as well as depreciation (for 27.5 years on residential property).
If you live within driving distance of your real estate rentals, you can also deduct your mileage – so be sure to keep track of how many miles you drive in order to check on your property(ies), make repairs, and meet with tenants.
In addition, if you just aren’t sure of what is and isn’t tax deductible, it an be beneficial to have your taxes done by a qualified professional. By going this route, not only will delegating your tax preparation allow you more free time, the fees that are charged can be deducted against your rental income on the IRS Schedule E form.
Need to free up even more of your time to focus on other things, yet still continue receiving monthly rent checks from your tenants?
If so, it may be time to consider working with a property manager who can take on a long list of duties, from marketing vacancies to collecting rent and making necessary repairs. For more details on how working with an Orlando property manager can work for you, just contact us.