As an Albuquerque rental property owner, you know you’re required to declare the income you earn from your investments at tax time. However, this shouldn’t deter you from investing. The benefits far outweigh the costs when it comes to taxes and rental properties.
Here are some of the Albuquerque rental property tax deductions you can take, and how they maximize your investment returns.
Depreciate Your Albuquerque Investment Property
One of the best ways to limit your tax liability as a rental property owner is by using depreciation as a tax deduction. Your property is almost certainly increasing in value, but the IRS allows you to deduct a specific amount in depreciation every year.
You need to be precise when you’re calculating your allowable depreciation, and it’s important to remember that you can only take the value of the property into consideration. You cannot depreciate the land you own.
The most recent IRS guidelines provide for a rental property lifespan of 27.5 years. So, you’ll use that number to calculate your depreciation. Divide the cost of your property at the time you acquired it as a rental by 27.5. That’s the amount of depreciation you can include in your tax return.
Deduct Rental Maintenance and Repairs
Most of the costs associated with maintaining your rental property can be deducted on your taxes. This includes repair costs and any materials that you need to keep your property in operable condition, such as paint, drywall, smoke detector batteries, air filters, and other supplies.
Keep in mind that you cannot deduct the costs of improving your home. If you renovate the kitchen or add a bathroom, those expenses are not tax-deductible. You may only deduct what it costs to maintain your Albuquerque rental property in a safe and habitable condition for your tenants.
Deduct Your Professional Fees and Mortgage Interest
If you have a mortgage on your Albuquerque rental property, you can deduct the amount you pay in interest on that loan. You can also deduct any professional fees you pay that are associated with the rental property. These might include:
- Property management fees
- Insurance agent commissions
- Attorney costs
- Accounting costs
- Real estate commissions
Rental property owners can also deduct any advertising or marketing fees during the leasing period.
Property Management Accounting: Know Where You Stand
At Bruni Karr Agency, we want you to be prepared at tax time. We make it easy by preparing monthly accounting statements that clearly show you a breakdown of income, expenses, and other financial indicators that tell you how your property is performing. This helps you stay informed, and it also prepares you for tax filing and reporting. These financial reports and analyses are available in your owner portal any time to want to check it out.
As your property managers, we’re working to provide a full-service Albuquerque property management experience. We know that managing your taxes and your finances can be difficult, and we’re here to make it as easy and automated as possible. Talk to your CPA or tax professional about other deductions that may be possible, and if you have any questions about what we’ve discussed, please contact us at Bruni Karr Agency.
