No one is a fan of tax season. It can be a real hassle getting together all of your financial records for the previous year and understanding the sum total of your tax obligations. But, if you started buy and hold investing in 2015, tax season has a silver lining. When you begin rental real estate investing, you become a landlord, and landlords enjoy a wide variety of tax deductions.
Be sure to work with an accountant or tax attorney to verify that all of your deductions are correct, but in the meantime, here is an overview of some of the biggest tax deductions that you can expect to take as a landlord:
- Loan points and loan interest
If you’ve taken out a buy-and-hold loan to fund your investments, you’ll be able to deduct both primary and secondary mortgage interest. You will also be able to deduct your mortgage points. Combined, these deductions will likely be your largest property related tax deductions.
- Any depreciation of assets
Each year, you can deduct the annual depreciation of property-related assets, including the value of the structure itself, the value of any improvements that you’ve put in place such as appliances, and the value of any equipment related to your landlord business, including business computers and printers.
- Repairs and maintenance
Any repairs that you need to do can be deducted in your taxes. This can include painting, fixture repairs, labor costs, and rental fees. You can also deduct the cost of regular maintenance, which can include landscaping, homeowner association fees, pool cleaning supplies, pest control, and janitorial items.
- Insurance premiums
All of your property related insurance premiums are tax-deductible. This can include fire and flood insurance, liability insurance, mortgage insurance, Worker’s Compensation insurance, and personal umbrella insurance.
This is just the beginning of what landlords can deduct. Other deductions include your utilities, trips to and from your rental property, the taxes on your property, and more. Again, speak with a tax professional in order to ensure that you are taking all of the deductions that you are due as a buy and hold investor.