For many people, becoming a Corporate Rental Owner (CRO) is an interesting and exciting option in today’s real estate market. It could be an out-of state job that requires you to relocate, or you perhaps you are experiencing financial hardship, or you may just want to take advantage of a property you currently own through which you would like to begin drawing some income.
Becoming a CRO is an individual decision for each person and you should consider all your options before entering into rental management. Whatever the case may be, it is important to know the advantages and benefits, many of which are tax-related, to leasing out your property and educate yourself regarding all aspects of property ownership and becoming a landlord.
If you are relocating for another job and are considering putting your property into the corporate housing pool, or have recently done so, there are some tax implications of which you should be aware:
- If there are upgrades that you have been wanting to make on your property (e.g., finishing a basement or redesigning your landscaping), doing it while your home is a rental property can help offset the income tax liability you would normally incur, because any maintenance or upgrades are deductible form your rental income.
- For tax purposes, rental property is handled less like your primary residence and more like a business. Tax deductions associated with having a rental property run along the lines of any business. Any expense that is necessary to manage and maintain the property can be deducted. This can include interest on mortgage payments, insurance, cleaning, landscaping and so on.
- As equity grows in the rental property, you can also convert the equity into a tax-free growth vehicle. Read more about this here Rental Property Tax Advantages
- If you lost your job and moved to take a new one, remember that moving expenses you paid are deductible, but only if the new job is at least 50 miles from the previous job site and you stay for a certain period of time.
No matter the circumstance that has led, or will soon lead, you to becoming a Corporate Rental Owner, it is important to familiarize yourself with the tax laws and financial aspects that surround renting your property. There are many advantages to be had, and property owners should seek out as much information as possible so that they are able to maximize the opportunities that exist. For more information about becoming a landlord, tax tips, and property improvement ideas, please visit the Corporate Housing By Owner blog.