Whether tax season has come and gone or has just begun, if you have any furnished houses for rent, it is of the utmost importance that you know how taxes may help you to enjoy higher returns.
In another CHBO article on this issue, we considered the expenses that you could (and could not) deduct at tax time, and it is a good idea to re-familiarize yourself with the viable deductions. However, many owners are unclear about rental property taxes and what the overall tax implications might be for this sort of income.
One of the first issues that many owners consider is whether or not that income is taxable. The tax experts have this to say: “rental income is taxable, but that doesn’t mean everything you collect from your tenants is taxable…You’re allowed to reduce your rental income by subtracting expenses that you incur to get your property ready to rent, and then to maintain it as a rental.”
That means maintenance, marketing, HOA, educational, accounting, and insurances, taxes and other financial fees are all among the deductions you can reasonably deduct from rental property taxes. Of course, most experts will agree that offering furnished houses for rent can create a real headache for you at tax time, but that does not mean that rental property taxes should be something that keeps you from this lucrative investment. Instead, just work with a savvy tax expert in advance of even investing in a property, and learn about the ways you can reduce taxes and enjoy easier accounting at the end of each year.
Don’t forget that your advertising fees on CHBO are tax deductible. Save your receipts and write it off.