Benefits of Being a Landlord

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The rental real estate business enjoys more tax benefits than most other investments. Check out some tax deductions that small property owners enjoy.

• Equity
Being a rental property owner can help you build equity over time. Each month you make a mortgage payment that consists of P+I(Principal and Interest). As long as your rate is fixed, your payment amount stays constant. What changes is the % of principal vs. interest paid each month. The amount that goes towards paying principal is what is known as equity.

• Appreciation
In any good housing market, properties increase in value each year. This means that your property will be valued at a higher price compared to what you purchased it for. Be sure to consult your CPA to confirm if this applies to your state.

• Interest
It is a landlord’s single deductible expense, with examples such as mortgage interest, payments on loans and interest on credit cards used in rental activities.

• Repairs
In most states, cost of repairs are fully deductible during the year they are incurred.

• Local Travel
As a landlord, you are entitled to a tax deduction whenever you drive for rental property related work. Be sure to consult your lawyer to confirm if this applies to you.

• Long Distance Travel
Travelling overnight for your rental property related work could also have airfare, hotel bills, meals and the likes deducted.

• Insurance
It is okay to deduct premiums you pay for almost any insurance for your rental property. Consult your lawyer to confirm if this applies to you.