Many owners of real estate in Los Angeles are unaware of the numerous tax deductions available to homeowners who lease their homes. In fact, the tax benefits available to rental property owners are way more than any other investment in the city.
If you are thinking about leasing a home in Los Angeles, knowing what tax deductions you are eligible for will help you earn a greater profit than expected. Here’s a list of some of the most common kinds of tax deductions for landlords owning residential rental properties.
Tax Deduction #1: Insurance Cost
Did you know that as a landlord, you can deduct the premium amount you pay for your insurance? Any insurance that is taken for your rental property such as the theft and fire insurances can be legally deducted.
Tax Deduction #2: Depreciation
Even though the cost of a rental property such as a house or condominium is not completely deductible during the year you pay for it, you will get back the amount of your real estate via depreciation. What this means is that you can deduct a percentage of the cost of your rental home over a period of several years.
Tax Deduction #3: Professional & Legal Services
The fee you pay for professional services, such as real estate advisors, attorneys, and property management companies, count as operational expenses. The amount you pay for any rental activity can be deducted.
Tax Deduction #4: Interest Payments
As a landlord, other costs you can deduct include interest payments to either improve the rental property or to pay mortgage loans.
Tax Deduction #5: Pass-Through Tax
This deduction is a form of income tax deduction that allows landlords to deduct a certain percentage of their rental income and property. Remember, however, that this type of tax deduction will expire after 2025.
Tax Deduction #6: Repair Costs
The amount of money you spend on repairing your rental property can be fully deducted in the tax year which they were incurred. Keep in mind that repairs are only considered to be the work that helps retain the home in a good working condition. Any form of repair that is done to increase the value of your home, such as renovation, is not eligible for tax deductions. Examples of deductible repairs are:
- Fixing leaks
- Replacing broken doors and windows
- Repainting stained walls
The above-mentioned tax deduction options will hopefully prevent you from paying more taxes than you are expected to. For more details about the legal and financial benefits of leasing a home in Los Angeles, contact Pezzini Luxury Homes by dialing 1-818-445-9557 today!