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Real Estate Tax Deductions

5 min read

As a real estate investor, you might have a slightly different view of taxes than the average person. Most people know that there are some tax advantages to owning real estate, but they really have no idea what they are or how much they can add up. And some of the recent tax reform has actually made the benefits even greater for real estate investors.

As a rental property owner, you have the ability to deduct almost all of your costs to manage and operate your rental property. This included things like the interest that you are paying on the mortgage for the property, insurance, fees to a property manager and even office supplies that are used in your real estate investment business. But there are also some more obscure deductions that you need to know about.

If you have a home office, then you can deduct a portion of the bills for your own home. It the office represents 5% of the square footage of your home then 5% of the expenses can be tax deductible as long as you meet certain usage requirements. And as a business owner, you can deduct the mileage that you drive to and from your rental properties to meet potential renters, check up on the place or just for maintenance services. And if you are giving your tenants or prospective tenants your cell phone number then that could be a business expense as well. You will be surprised at the number of everyday expenses that will translate to necessities for your business once you learn how these rules can work in your favor.

Not all real estate investors stick to a single market or city for their rental properties. There is a common belief that you will be protecting your financial future by diversifying into multiple markets with your rental properties. If this is your business model, then you are going to need to do some traveling from time to time. If the travel involves going to your rental properties in other cities or states, then you could be eligible to deduct food, lodging and other travel expenses related to tending to your remote properties. But what you don’t want to do is try to scam the system and plan a drive past your rental property on the way to an amusement park with the entire family then write off the entire weekends expenses.

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