Year End Tax Tips For Rental Property Owners

As 2011 comes to a close it is a good time to start thinking about the litlle things that may help you as an investment property owner save a few extra tax dollars. If you own rental property and have the ability to deduct some of the expenses related to it. Here are a few things to think about. Please consult with your tax advisor on any tax related issues. We think owning rental property in 2012 is a great idea.

 

Rental Property Repairs

Is your property in need of some repairs that you have been putting off ? Get them done before the end of the year.  Replace a water heater, install new windows, fix those nagging little problems. Repair expenses can help offset any rental income you may have. You can also purchase goods and services needed for the rental property business, and pay the bills early. Repairs and Improvements are different. Improvements are depreciated over the life of the property while repairs are treated as an expense.

Claim Your Automobile Expenses

Automobile expenses paid exclusively for your rental business can be fully deductible. You can select either the actual expenses method or take the standard mileage deduction. If you made 10 trips to the property and each trip was 100 miles, you can expense 1000 miles at .55 per mile.

Make an Extra Mortgage Payment

The additional interest you pay will help reduce your income. If you have an operating  loss and are able to deduct this, you may save on the amount of income tax you pay on monies earned elsewhere. You may also be able to pay your property tax bill that is due in Feb 2012 early.

Rental Property Asset Depreciation Expense

What are your property’s  short life assets ? They can be depreciated faster.  Assets like air conditioners, refrigerator, carpets, clothes dryer, etc can be depreciated over a five year  life while fences, patio, sidewalk, etc can be depreciated over 15 years. By separating assets and depreciating them separately, deductions are taken sooner.

Energy Saving Home Improvements

Replace old appliances, windows etc to qualify for tax rebates. To find out what applies to your property visit the Energy Star Website. Tax rebates that were offered in 2010 were changed in 2011. However there are some great rebates to take advantage of. Check the list of items here.

If you have any Tax related questions please consult our preferred tax advisors, Smith & Wooten CPA at  (805) 585-3800 or visit their website

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