3 Strategies to Reduce Your Rental Property Tax Burden

Rental property taxes are levied against any income you earn from rental properties. This includes rental payments themselves, tenant-paid repair expenses and the value of any services your tenants performed in exchange for rent. Luckily for you, owning a rental property also entitles you to tax breaks. As you know what to claim, you will be able to save money and make retail properties profitable.

Claim a Loss

For income tax purposes, you are either a passive or a non-passive landlord. A non-passive landlord is someone you earns most (if not all) of their income from their rental properties. A passive landlord is someone who uses rental properties to supplement his or her income. If you have a property that you are renting out until you can sell it, you are in that category. If you are a non-passive landlord, you can deduct all your losses. If you are a passive landlord, you can only deduct up to $25,000 in loses. You can, however, carry over anything extra to the next year.

Claim Repair Costs

Any repairs you make in order to keep your property in good condition are tax-deducible. This may include things like painting, fixing a broken toilet and replacing a faulty light switch. However, you cannot claim a deduction on any improvements or renovations that increase the value of your property. This may include getting a new roof, new decorations, etc.