Investment Property Tax Deduction

Making the most of your investment property tax deductions is crucial...

Investment property tax deductions are one of the most important things to consider if you want to maximize your profit potential in the real estate industry. A lot of people involved in investment property are throwing away their potential tax credits by half-heartedly calculating or not even considering the depreciation their property can bring them, and the various deductions they can make during the maintenance of their building.

Just like any self employed person or freelance worker, any costs directly associated with running the business or in this case maintaining the property can be claimed on the tax form, meaning less tax on income, and therefore more income for you. Although there are quite creative deductions you can come up with (not completely fabricate), such as airfare or business lunches, there is a huge list of common things that should not be ignored. Investment property tax deduction is not hard once you get in to the flow of it.

Things to look out for:

• Accounting fees – Yes the process of determining your deductions, can actually be a deduction.
• Advertising – All those local newspaper ads cost money, so tally it up.
• Agent Fees – You paid them to help with your investment, so it is a deduction.
• Debt & Borrowing Expenses – If you had to borrow to cover business costs, then they two can be deducted.
• Building/Structural – Made an extension, reinforced the foundations?
• Cleaning – If you pay a cleaner, or buy cleaning products just for the property then they are deductible.
• Electricity & Bills – Perhaps the most common thing to consider.
• Bank Charges – If you incurred business related bank charges, these can be deducted.
• Gardening – See cleaning.
• Insurance – Another direct business cost.
• Land Tax – Getting tax back on tax, we love it.
• Legal Fees – If you had a bad tenant that cost you legal fees, they two can be deducted.
• Office Supplies – Pens, stationary, envelopes, pc equipment etc, that is directly used for the admin side of the property.
• Repairs – it costs to fix things.
• Security – Whether that be alarm systems or big bad men in uniform.
• Travel – you have to pay fuel to get to your property right?

This is not an exhaustive list but it gives you a good idea of all the costs associated with investment property tax deduction and should help you greatly when it comes time to fill out your tax return.