Tax Deductions for Rental Properties

Claiming all the necessary tax deductions and credits on your tax return is your right as a taxpayer. Yet, not all rental landlords and property managers keep excellent records.

If this is you, there is a simple solution to claiming your deductions and avoiding penalties — it’s to use a property accounting software to record and attribute deductions precisely.

When you must complete your tax forms or your accountant does, you’ll be confident you’ve done your taxes as well as possible. Using a viable property management accounting solution will help with your strategy to minimize tax owing and avoid an audit from the IRS. You can also learn more about property tax strategy in property tax management books.

Taxes are a Major Cost/Liability

Finding and claiming all tax deductions is an essential part of managing property management cost.

Let’s take a quick look at 20 tax deductions for landlords and property managers that will help you protect your earnings in 2022/2023:

1. interest on mortgage payments and other loans
2. pass through, De Minimis safe harbor deduction (including furniture, appliances, gardening equipment)
3. tenant acquisition and business advertising costs
4. maintenance, repairs, inspections and cleaning
5. utilities/water/heating/electricity
6. landlord and property management insurance policies
7. local license fees and charges
8. IRA/401k contributions
9. health savings account contributions
10. property taxes
11. equipment depreciation
12. equipment rental fees
13. contractor fees
14. company car/truck insurance, fuel, toll road fees, and travel costs
15. meals and entertainment
16. computers, internet service fees, SaaS software subscriptions, and Proptech tools
17. office rent, supplies
18. staff wages, training, certification fees
19. convention attendance
20. professional fees for Realtors, tax accountants, lawyers, and home inspectors

Let Your Software Keep Reliable Records

Property managers can keep good records of your business activities including keeping invoices, receipts, auto mileage, utility bills. Use your property management software to record business income and expenses, and attribute costs according to agreements on leases, and between all your owner clients as per contracts. Your accountant will be pleased and landlords will be impressed.

Many SaaS property management solutions have weak accounting functionality and no tax management capabilities.

Financial and tax matters are considered external to most property management solutions. However, you’ll enjoy using ManageCasa’s professional level accounting platform to present your income/expense documents to your tax accountant and financial advisor to aid in good tax decisions.

Being unorganized and undocumented invites financial losses, fines and other penalties from the IRS. Your company’s brand reputation and your property manager certification might be in jeopardy too if you’re found to be professionally negligent.

Your property accounting software is your best assurance you’ve got all your expenses and income recorded and properly attributed to the correct accounts.

*  Come join us at NMHC’s Annual Conference in Las Vegas on November 1st. Let’s talk about your property management challenges and where your company is headed.

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