Landlords
What Closing Costs are Deductible?
There are many closing costs associated with purchasing rental real estate. These closing costs are reported on your Closing Disclosure and, for tax purposes, are treated as one of the following: Currently deductible cost Cost added to the “loan basis” and amortized over the life of the loan Cost added to the “building basis” and…
Read Full Article2021 Vehicle Purchase Deductions for Landlords
Do you need a new business vehicle? Perhaps one that you can lug rehab materials around in or drive to your rentals? And do you need tax deductions this year? Real estate investors who are running a trade or business (most landlords are) can claim a deduction for purchasing a new or used vehicle. And…
Read Full ArticleWhat Does ‘Material Participation’ Mean?
When a real estate investor becomes a landlord, they often look into tax breaks associated with owning rental property. There are many tax breaks associated with owning rental real estate. Ordinary expenses like insurance, property taxes, and repairs can be deducted in the same year incurred. Larger improvements are “capitalized” and “depreciated” over a long…
Read Full ArticleWill Your Mileage Log Withstand IRS Scrutiny?
Business mileage is a tax deduction available to most real estate investors. As you wear your car down traveling between rentals, builds, flips, and client sites you can and should keep detailed records of the trips because the deduction can really add up. In 2021, every business mile you travel qualifies for a 56 cent…
Read Full ArticleWhen are Travel Expenses Deductible?
You never know where your real estate investing will take you across the country or even the globe. As such, it’s important to know when certain business trip expenses are deductible, and when they are not. Better yet, if you learn these rules you can strategically plan for your business trips to be tax-deductible even…
Read Full Article1031 Exchanges: Understanding Taxable Boot and Deferred Gain
Most experienced real estate investors know about the 1031 exchange. But if this is your first time hearing about it, in short, a 1031 exchange allows you to roll the gain from your rental property into the next property. Think back to when you would play Monopoly as a kid (or yesterday if you’re like…
Read Full ArticleHire Your Child, Save Big on Taxes
Owning a business is a stressful endeavor that can be rewarding, both financially and emotionally. One major benefit of running your own business is that you can kick-start your child’s career by hiring them in your business. This will allow your child to develop important skills at an early age. It will also allow your…
Read Full ArticleAre You a Real Estate Dealer or Investor?
Among the many tax benefits available to real estate investors is the ability to pay a reduced tax rate on the gain from the sale of properties. When a real estate investor sells a property, the investor pays capital gain rates. The maximum long-term capital gain rate is 20% for properties held more than 12…
Read Full ArticleLandlord Loses on Improvement vs. Land Value Allocation
A Tax Court case, Nielsen v. Commissioner (TC Summary Opinion 2017-31) gives landlords insight into how the IRS will audit land vs. improvement values. The taxpayer owned property in Las Angeles and claimed depreciation deductions on the full purchase price of the property which included the land and buildings. The IRS found this error during…
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