GoRenter.com Reviews Various Real Estate Tax Deductions For Arizona Landlords.

ARIZONA PROPERTY MANAGEMENT COMPANY EXPLAINS THE TAX ADVANTAGES FOR ARIZONA RENTAL PROPERTY OWNERS

Year in and year out, landlords across the nation pay more taxes on their rental income than they should because of their failure to take advantage of all the tax deductions available to them as owners of rental property. With the current Arizona real estate market heating up due to record low home prices, more and more investors are purchasing Phoenix-Metro rental homes. And although rental real estate provides more tax benefits than almost any other investment it is up to you the landlord to find out how to take advantage of these deductions to your benefit.  For these benefits can mean the difference towards profitability, generating passive income or losing money and perpetually draining your bank accounts.  GoRenter.com, an Arizona property management company explains the different tax advantages available for landlords.

Here is laundry list of tax deductions for owners of small Arizona residential rental properties:

1. Home Office

As a landlord you may deduct your home office expenses from your taxable income, provided that it meets certain minimal requirements.  This deduction applies not only to space devoted to office work, but also to a workshop or any other home workspace you use for your rental business. Whether you own your home or reside in an apartment or as a renter, this deduction can still be applied.

2. Legal and Professional Services

In order to run a successful rental business, you will need to have a team of professionals to help you navigate the ups and downs of being a professional landlord.  From attorneys, accountants, property management companies, real estate investment advisors, and other professionals.  As long as those fees are incurred due to your rental activity they can all be deducted as operating expenses.

3. Contractors

You will have maintenance to do on your Arizona rental homes.  Whenever you hire anyone to perform services for your rental activity, get your estimates/invoices broken down into parts & labor.  You can deduct their wages as a rental business expense.

4. Repairs

Repairs are a natural part of being a landlord and those expenses are fully deductible in the year in which they take place. Fixing leaks, replacing broken windows, plastering, repainting or fixing floors are all examples of deductible repairs.

5. Insurance

Fire insurance, Theft insurance, Hazard insurance.  Almost any insurance premiums you pay for due to your rental activity are deductible.   Additionally if you have employees, the cost of their health and workers’ compensation insurance are deductible as well.

6. Casualty and Theft Losses

Casualty losses are losses incurred f your rental property is damaged or destroyed from a sudden event like a fire or flood.  If this were to occur you may be able to obtain a tax deduction for all or part of your loss. Typically you won’t be able to deduct the entire cost of property damaged or destroyed by a casualty.  How much you may deduct depends on whether the loss was covered by insurance and how much of your property was destroyed or damaged.

7. Depreciation

When you purchase a house for the purpose of turning it into a rental, the actual cost of that house is not fully deductible in the year in which you pay for it. However through depreciation, landlords get back the cost of real estate by deducting a portion of the cost of the property over several years.

8. Travel

As a Landlord you are entitled to a tax deduction whenever you drive anywhere for your rental activity.  For example, is you drive down to the supply store to pick up parts for some repairs or go “on-site” to meet  to handle a tenant dispute you can deduct your travel expenses.

You have two options for deducting your vehicle expenses. You can:

• Deduct your actual expenses (gasoline, upkeep, repairs).
• Use the standard mileage rate which is .55 cents per mile for 2009.   Be sure to consult your accountant on how to qualify for the use of the standard mileage rate.

If you travel overnight for your rental activity, airfare, hotel bills, meals, gasoline and other expenses are all deductible. In order to avoid scrutiny keep careful records of all expense incurred while you travel and back those up with the right records such as receipts.

9. Interest

Typically this can be a landlord’s single biggest deductible expense.  Interest on credit cards for goods or services used in a rental activity and mortgage interest payments on loans used to acquire or improve rental property are the two most common interests that can be taken as a deduction.

10.  Corporate Structure

While not a deduction in of itself per se, Depending on your long term investment strategy your choice of business structure helps to determine not only which tax deductions are available to you, but also how to best protect your investments.  So make sure you consult a good attorney & tax accountant in order to understand how to approach your business as a good sound real estate investment strategy.

About The Author GoRenter.com

GoRenter.com is a leading provider of professional residential property management services in the Phoenix-Metro area. We are dedicated to maximizing the return on investment for our property management clients while maintaining quality housing opportunities for our rental residents. We manage all residential rental properties including single family homes, condominiums, townhomes, and duplexes. Our mission is to offer personalized and professional service to both our clients and customers by building strong relationships, utilizing the latest technology, implementing effective marketing strategies, following consistent systems all with honesty and integrity throughout every facet of our business. We are confident that our property management team will exceed the industry standards in the services we provide. 

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