Are you a landlord and are thinking about the top tax write-offs for 2018? If so, as the top company in Ventura that specializes in rental services we can tell you that it’s never too early to start thinking about tax write-offs for the year.
In this article, we will share with you the top tax write-offs that you don’t want to miss taking advantage of:
Depreciation
Depreciation can be defined as a process of viewing the wearing of your property or building as an expense. Even though you may not feel that your rental property is technically “wearing out”, accounting principles do allow you to deduct the eventual costs that come with maintaining a property through the use of depreciation.
To determine what the depreciation should be for your building you should speak with your accountant or tax professional.
Factoring depreciation is fairly easy. Most CPA’s depreciate the rental property value then minus the cost of the land over a period of 27.5 years. This is also known as straight line depreciation.
Mortgage Interest Deduction
Did you know that you can deduct the interest that you’re paying on the mortgage for your real estate property?
There is more than one way you can do this. You can deduct the points plus the loan origination fees. It’s also possible for you to deduct interest that you’re paying on unsecured loans, credit cards, credit lines and interest on loans that you’re paying for your property.
Every time you make a loan payment o your bank for your rental property you’re actually paying two components. Principal and interest. This can be verified by reading your monthly statement.
Sadly, you cannot deduct the principal portion but you can deduct the interest portion of your payment.
Example: Let’s say that with each loan payment you’re paying $800 in interest. Over a period of 12 months that interest adds up to an annual deduction of roughly $9,600!
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