Investment Property Tax Deductions

The tax filing deadline is quickly approaching! Did you know that as an investment property owner, you can deduct property expenses to reduce your tax liability? Any expenses that you’ve paid to make the property livable, can be considered deductible! 

What exactly can be used as a tax deduction? We’ve put together a list of tax-deductible expenses you don’t want to miss out on this tax season!

Monthly Utility Expenses: Your utilities are a standard operating expense for your investment property. Utilities that are deductible include water, sewer, trash, electric, regular pest control, pool maintenance costs and landscaping.

Interest on Mortgage: If you carry a loan on your rental property, interest on your mortgage payment may be one of your largest tax deductions. 

Advertising: Did you have a vacancy this year and pay to advertise online or in the newspaper? Include this in your deductions! 

Maintenance and Repairs: Most of the repairs that you complete at your rental property are deductible for ordinary maintenance. These repair costs can include appliance repairs, plumbing repairs, electric repairs, carpeting, painting, roof patching, cleaning, labor costs, and materials/supplies.

The IRS has an outline to distinguish the difference between repairs and capital improvements. If you’ve done extensive remodeling this adds value to your rental property and must be deducted over a longer period of time.

Wages paid to onsite managers: If you have an apartment community larger than 16-units in California, you are required to have an onsite apartment manager. The salary paid to your onsite manager should be included in your deduction list.

Management Fees/Commission: If you hire a management company to oversee your investment property operations (hopefully, California Oaks Property Management!) the management fees are 100% tax deductible! 

We always recommend investment property owners consult a professional accountant or the IRS to determine you are filing taxes in the correct way and using the proper deductions for your specific rental property. 

If you are feeling unorganized during tax filing time, consider calling California Oaks Property Management to discuss how our professional Property Management software, owner portals, details owner reports and 1099's can streamline your investment property accounting today!