While the stress of finding the perfect tenant and fixing up odds and ends sometimes deters homeowners from renting out their homes, the tax deductions can often sway their decision.
If you save receipts and include such expenses on Schedule E of your tax return form, many of the necessary maintenance can be written off, even if the property is vacant for a short time. Common expenses to write off are advertising, cleaning and maintenance, commissions paid to rental agents, HOA dues, insurance premiums, legal fees, mortgage interest, taxes and utilities. Less obvious deductions include expenses to obtain a mortgage and fees paid to an accountant for preparing your Schedule E tax form.
And important thing to remember that as long as there are sleeping, cooking and bathroom facilities, even a houseboat or trailer can be considered rental property.
If you have to travel to the rental property in order to show the home, collect rent or maintenance, you can write off up to $0.55 per mile. In terms of maintenance, there is a fine line between repair and improvements. You can only deduct expenses that keep your property in working condition and not changing out your old counter-tops to fancy new granite.
You can also deduce depreciation value of the home over a set number of years as well as profits/losses on rental property.
Be sure to read carefully and fully inspect all the details of what you can and cannot deduct here: http://www.irs.gov/publications/p527/index.html.
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