One of the greatest benefits to completing the requirements for an AIPIS real estate designation is the knowledge gained regarding all aspects of income property investing. Many realtors (maybe you) aren’t aware of the plethora of tax deductions available to the landlord. Generally, any expense associated with maintaining, marketing, or repairing your rental property is a legitimate deduction. Let’s look at some of the possibilities. Remember, realtors, that all this information is good to keep stored away when you’re educating possible clients about reasons real estate is far superior to the stock market as an investment strategy.

Travel Expenses
Don’t forget this one because at the government mileage reimbursement of fifty cents a mile, it can add up fast. The basic idea is that travel to and from activities associated with your rental property are tax deductible, whether you’re driving across town to the hardware store or across the state to show a unit to a potential tenant. If the travel is done during the pursuit of rental activity, it’s a tax break.

Interest
Interest you pay on a mortgage on the rental property is deductible. This might add up to several thousand dollars a year, which can offset a nice chunk of income. Also plan on getting a credit card that you use exclusively to pay for rental related expenses like repairs and maintenance. The interest you pay on these is also tax deductible.

Home Office
Presumably you have a space set aside in your house to complete paperwork and take (make) phone calls pursuant to your role as landlord. If you don’t, you should. A designated home office space allows you to deduct a portion of the costs associated with home ownership like utilities, phone, personal home mortgage and interest, as well as furniture and supplies used in the office space. The main idea to keep in mind is that it must be dedicated ONLY to business regarding your rental and can’t serve double duty as a storage room or den.

Also keep in mind that we at AIPIS are NOT tax professionals and these tips are only provided for your guidance in doing further research with the qualified tax person of your choice. AIPIS teaches realtors like you all the ways income property investing is superior and tax breaks are just one aspect.

The AIPIS Team

Flickr / Phillip