Taxes are one constant in life and they can be incredibly complex and frustrating. However, there are many laws that can help to give a landlord a break on their taxes. Understanding the expenses that can be deducted from your taxes can go a long way toward providing the best outcome for you this tax season. The first thing you must do to prepare for tax season is to keep thorough, detailed records of all your expenses. This will ensure that you have the information that you need if you receive an audit from the IRS.
Capital expenses are costs that have long-term value. They tend to be larger amounts than current expenses and need to be depreciated over a period of years. This is done to prevent individuals from taking advantage of tax laws by writing off the total expense in a year, then selling the property the following year. Vehicles that you use for your business, the expense of the structure, the cost of improvements, and the equipment that you use for your business can all be considered capital expenses.
Current expenses have short-term value. The entire value of current expenses can be written off in the year that the expense was incurred. To be considered a current expense, the expense must be ordinary, necessary, related to your business, of a reasonable amount, and have short-term value. Repairs, maintenance, insurance premiums, utility expenses, and more can be considered current expenses. These don’t have to be depreciated over time. The fees for property management companies, like Keyrenter, are also tax-deductible expenses.
Taxes can be both difficult and stressful, but they are a necessary part of life. To learn more about how to best take advantage of tax laws as a landlord, contact us at the Keyrenter in Huntersville today!