As a short term rental property owner, you know that your taxes can be a bit more complex and often depend on a number of factors.
Here are some tips to getting your taxes right on your month-to-month furnished rental:
Calculate your gross rental income. This includes your collected rental fees and any other special fees you’ve collected from your renters, including cleaning, parking and pet fees as well as any monies you keep from a security deposit. Note that security deposits in themselves are calculated as income unless you keep the money and use it toward repairs.
Determine your deductions. Deductions include your taxes, insurance fees, mortgage interest, closing costs (including refinancing closing fees), HOA dues and special assessments, utility and amenity expenses associated with the property, maintenance fees, property management fees (if any), legal fees, furniture, etc.
Marketing fees count as deductions too! Don’t forget that any money you spend to market your property is tax deductible too. So your CorporateHousingbyOwner.com subscription fee is deductible, as well as any ads you place in the newspaper, website hosting fees, photography, etc.
Keep good records. You need to make sure you’re keeping good track of all your income and expenses.
Keep a file folder and file away all your receipts – and use either QuickBooks or a spreadsheet to document everything. This will make it easy for you or your accountant to do your taxes in the most efficient and timely manner possible.
Ask questions. Lots of people know lots of things so why not ask? The next time you are talking to a fellow landlord ask them about how they deal with their taxes and if they have any great advice. People really love to talk about what they know and the accomplishments they have achieved. You’ll be amazed at what you can find out by just mentioning investment rentals at your next cocktail party.
Get help. It’s wise to work with a qualified accountant to ensure you’re maximizing your deductions and getting everything right… it will certainly pay off in the long run!
Remember, you should always consult a tax advisor about your taxes – this blog post is not a substitute for professional tax advice.