Real estate investors can benefit from tax deduction on the properties that they have invested in. Most of the expenses that you incur related to your properties can be written off as taxes. Any improvements that you make to a property that you have purchased can be a tax deduction. Anything from new flooring to painting your property to putting in new appliances can help you get money written off of your taxes.

Consider this: you are increasing the value of your rental property and also saving money on taxes. It’s a win-win for anyone investing in real estate.

Take Advantage of the Latest Tax Reforms:

The latest tax reforms passed by the Trump Administration’s Tax Cuts & Jobs Act of 2017 added many new tax deductions and benefits for real estate investors. One of the newest laws as of 2019 is called the Qualified Business Income Deduction (QBI) or Section 199A of the IRS. This law allows you to take up to 20% of your rental income to immediately be deducted from your taxes.

Maintain Good & Consistent Records:

Maintaining good and consistent records is key to being able to itemize your taxes. Keep your receipts as well so that you can prove the expenses you have paid. This will help make completing your tax return easy and allow you to justify the items that you itemize on your returns. The more information that you can provide on your taxes, the better it will be for your returns. The less likely the IRS is to have any questions.

Invest in Qualified Opportunity Zones:

Investing in Qualified Opportunity Zones offers a number of tax benefits. When you invest in lower-income areas, you help improve the community and make it a better place for those who live there. If you invest in these lower-income areas, then you are able to take another 15% off of your taxes.

This means that the neighborhood, the people living there, and your business can all benefit from helping improve the lower income areas. All of this is done while helping improve people’s lives.

Other Tax Deductions Your Business Can Use:

You also may consider several other tax incentives that you can write off of your taxable income. Some of these write-off items include

Business Startup Costs
Costs Incurred While Looking at New Properties
Educational Costs
Employee Wages
Energy-Efficient Appliance Upgrades
HOA Dues
Interest on Loans/Lines of Credit
Internet/Cell Phone Expenses
Legal Fees If/When Eviction Occur
Business-Related Meals/Entertainment
Maintenance
Property Management Company Fees
Rent/Purchase of Equipment/Tools
Repairs
Subscriptions/Memberships

These expenses can usually be written off of business expenses. However, you need proper documentation to ensure that you are proving your tax write-off costs to the IRS in order to avoid any questioning that may come with writing off extra expenses.

Taking advantage of the tax write-offs available to you can help you minimize what you owe in taxes each year. For more information on how to take advantage of real estate when you are doing your taxes, please feel free to contact us for more information. We are here to help.