Tax deductions for a investment property?

[Peter K.]

Anybody with knowledge with taxes: what specific items can you deduct for tax purposes? I know you can claim depreciation on your home and gas for going to and from your investment home? Anybody have a list? I know I will speak with a CPA but I wanted a general concept before going to talk with a CPA.

Generally, what good/bad tax implications do you have when you own an investment tenant occupied home?

[Ashish Acharya]

There are various stuff that you can deduct.

Rather than giving you the list, first, let me say that you can deduct expenses that meet these two criterions:

1. Ordinary Course of Business
2. Necessary in the course of business

Here is the list some of the items:

1) Mileage: any mileage that is associated with the rental activity. Use apps like MilesIQ to keep track of it. Note: If you go to the same meeting each month, you can do detail tracking for a month, and can use same detail to estimate expense for rest of the year.( If nothing changed)

2) Meals when traveling away from home - 50% is deductible unless the meal is provided to the general public (like Open houses) than it is 100% deductible. Open House - Meals and entertainment (Balloons)

3) Expenses for Meeting with investor

4) Expenses For Meeting with realtor

5)Going to investors meetings. Mileage and meals

6)Money paid for RE tax book is also the tax deduction.

7)Any expenses that help you with RE investment can be deducted. Eg. HOA fee - If HOA fees are not paid, business will incur fines, so it is necessary to make the profit in the business.

8) Marketing expense and advertising

9) Cleaning and maintenance

10)Commission (Expenses like commission, abstract fees, recording fees to obtain your mortgage are not deductible but rather capitalized )

11) Insurance

12)Legal and other professional fees(Tax preparation for business, not personal part)

13)Management fee if applicable

14) Points- you generally cannot deduct the full amount the first year but have to deduct them over the term of the loan.

15) Repairs (Note always do repairs rather than improvements to rental because repairs are deductible right away and do not have to depreciate over few years as done for improvements. Repairs do not have to recapture when you sell the house too.)

16) Utilities

17) Pre rental expenses ( expenses incurred before finding a tenant )

18) If you use your Car: This can include- oil changes, Maintenance, gas, repairs, parking, tolls, and depreciation. If you use the personal car, make sure to keep detail record so that CPA can prorate the expenses between personal and business.This can include- oil changes, Maintenance, gas, repairs, parking, tolls, and depreciation. If you use the personal car, make sure to keep detail record so that CPA can prorate the expenses between personal and business.

19) Any equipment you rent for the rental business.

20) Mortgage interest and property taxes

30There are many others and depends on specific situations. 

Generally, it is always a good if you do your HW on the cash flow. You have to recapture the depreciation( have to pay taxes on the depreciation you take now) if you ever sell the property. There are strategies around it but that is a different topic.