Owning one or more rental properties is an excellent way to ensure an ongoing income. Knowing the best tax reduction strategies and applying them can make your investment even sweeter.
First, a Note About Record-keeping
To ensure that you can claim as many tax write-offs as possible on your investment property, keep all your receipts–and keep good records.Keeping your tax records organized and up-to-date will help simplify things at tax time. And, accurate records are important in case the IRS should ever audit. You will need to have receipts for all deductions and be able to show all money received.
Interest
Mortgage interest is tax deductible. Interest paid on loans for repairs, remodeling and renovations is also tax deductible and can give you a nice tax break. And any interest you pay on credit cards for purchases of goods, supplies, and services for your rental property can also go on your taxes as a deduction.Insurance
Any insurance policies used to cover possible landlord liabilities can also be part of your tax reduction strategy. You can deduct the cost of premiums for fire, theft, and flood insurance.Participation in Your Business
The IRS has some special tax rules dealing with income and deductions from real estate investments. It differentiates between those who make passive real estate investments and those who invest materially in the property.
