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Rental Expenses Landlords CAN’T Deduct on Their Taxes

A property manager near me always dwells on taxes. Investors in rental properties have many expenses that can be deducted on their taxes. There are three primary groups expenditures fall into for tax purposes. The first group includes expenses that can be deducted in the year the money was spent. These expenses include routine maintenance and upkeep, management costs and fees, and home or neighborhood association dues.

The second group of expenditures are deductible , but over a period of years, not all in the year the funds were spent. This is called a depreciated expense and generally includes anything that lasts longer than one year. These kinds of expenditures include new appliances, heating, and cooling equipment, and the building itself.

The third group of expenditures cannot be deducted at all.

Some everyday items that generally cannot be deducted from your taxes include the following:

rental taxes

  • The cost of the land the rental property is located on. Land is considered to last forever and never wear out. However, the assessed value of the land changes over time, either increasing, or decreasing in value. In some states, the local taxes paid for the land are deductible. Others do not allow this deduction. However, the value of the land cannot be depreciated. If you own the buildings and do not own the land, the cost to lease the land is potentially deductible as an annual expense.
  • The fees paid to anyone for referring a tenant to you are capped at $25 for deductions.
  • Any amount paid over $25 as a gift for any purpose is not deductible.
  • If you allow family members to use a property without paying rent, you cannot claim the unpaid rent as an expense or a loss.
  • Certain expenses paid at closing will be deductible as business expenses in the year of the closing, but others will need to be included in the value of the property and depreciated over time. Some legal fees cannot be deducted at all.
  • You cannot deduct the difference in prime rent from the reduced rent charged when the condition of the property changes , or , changes in the neighborhood, or the community the property is located in changes and the rents the property commands are reduced by these market conditions. If a military base closes and the inventory of apartments exceeds the number of rental customers , you cannot deduct the difference between the new reduced rent and the original rent.
  • You cannot deduct the lost income from a unit or building that you take off the market. If a multi tenant building needs extensive renovations and you stop renting units , the lost rent is not deductible. This also impacts your depreciation.
  • Membership in a buyers club such as Sams or Costco cannot be deducted as a business expense. This is because it is not a necessary expense. However, goods purchased for the use in the business, like cleaning materials or copier paper used to copy leases can be deducted as business expenses. The same goes for social clubs where business deals might be discussed. Strictly professional trade organizations are generally deductible.
  • Parking tickets, safety citation fines, late fees on taxes are not deductible.
  • Business attire is generally not deductible. Attire that is “ specialized” like a work uniform with the company name is deductible.
  • Meals: if you decide to treat the staff to a “ lunch and learn” event, generally only half of the food cost is deductible. Only half the cost is deductible if the lunch is a reward for achieving a goal or just for recognition.
  • Attorney and legal fees are not deductible. This is why itemized settlement statements when buying or selling real estate are so vital.
  • Federal taxes paid are not deductible as a business expense. Generally, any taxes are not deductible.
  • Bribes, kickbacks, or anything illegal. Materials imported into the US illegally or fraudulently are also not deductible. Be certain that if you buy furnishings for furnished apartments, that the correct import tariffs are paid, and include that in your contract to purchase. Wages paid to workers “ under the table” are not deductible as a business expense.
  • Travel for a travel companion that is not a direct employee or owner of the business. Owner or staff travel for business purposes is deductible, but a non employee travel companion, or a spouse not employed or an owner is not deductible.
  • Late fees or collection fees that are deducted from a tenants deposit are not deductible as business expenses.

    • The Benefits of Using Premier Business Investments

    rental business taxesThe tax laws governing property management benefits are complex and varied. Premier Business Investments always works with our property owners to insure they receive the information they need to address the expenses with a tax professional. Premier Business Investments does not provide legal or tax advice.

    As your property manager, we supply the detailed financial documentation our property owners need to work with tax and legal professionals. Advanced Business Investment strives to maintain close tenant and property owner communication. We employ the latest rapid online application and approval systems to engage prospective tenants early and with the least amount of difficulty for the tenant.

    And lastly, we utilize online, and app based ,and call in systems to report maintenance issues. Our maintenance staff is on 24 hour call in the event of an emergency. Our goal is to manage all of the properties entrusted to us as if they are our own properties and to maximize the return on the properties.

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    How to Prepare Your Home for Your Next Tenant

    Do you own rental property? What are your top tenant acquisition and retention strategies? Compelling listings, maximizing on local amenities, and excellent communication deliver on your ROI. Then, why not start by preparing your home for your next tenant with your property manager? Yes, you want to remodel, clean, and carry out all necessary repairs and maintenance. Then, here are some tips to get you started:

    The Walls – Cleaning, Sanding, Repainting

    walls paintingWalls need to be free of any imperfections. Also, inspect them for scuffs, marks, or scratches from the previous rental period. To do so, organize for a thorough cleaning session. Use grease-cutting soap or residue cleaning detergent depending on the type of dirt on the walls. Finally, use a damp cloth to wipe off in preparation for repainting.

    Do you see any rough spots after cleaning the wall? Sand it to even it out. Then, check on the condition of the paint. Is it flaky or cracking? Correct it before applying a fresh coat of paint. Continue with sanding and scraping to get rid of all flaked or cracked paint.

    Next, pick a neutral shade for your primer or a fresh coat of paint. The paint makes the rooms look spacious, sparkling clean, well ventilated, and cozy. Plus, such colors complement any home décor theme. Next, pick a sheen that is easy to clean and maintain. Then, use appropriate painting tools that include rollers, brushes, sprayers, and protective eyewear.

    The Floors

    When a tenant moves out, use this time to upgrade your flooring. For example, most tenants prefer wooden floors due to their durable and easy to clean condition. Then, get rid of the worn-out carpets in exchange for the latest hardwood floor design.

    But, if you intend to stick to your old flooring, inspect it and make appropriate renovations to improve its condition and appearance. Do the floor renovations last? Otherwise, you may have to redo it due to dirt and scratches while renovating the upper sections of the house.

    The Appliances and Amenities

    kitchen appliancesYour Property Investment Consultant will tell you that appliances are one of the top features tenants look at in deciding whether to rent your premise or not. Likewise, a little improvement or change in such amenities can help you to increase your rental fees substantially. These appliances are large and costly to the tenant. Yet, the tenant needs them for convenience around the home. Then,

  • Inspect your current appliances for any leaks, cracks, or malfunctions.
  • Confirm that doors to your oven, refrigerator, or washing machine have a tight seal.
  • Check the drip bowls, coils, hoses, and vents for molds, dirt, or debris.
  • Conduct a spring cleaning exercise for all your appliances.
  • Check their expiry dates and power or fuel consumption.
  • Categorize your equipment in readiness for repairs or replacement.
  • Involve a certified technician to handle the repairs.
  • Upgrade your old or damaged appliances to the latest models that use smart technology.

    • Other amenities include air conditioning, lighting, security systems, water systems, storage facilities, and off-street parking.

    The Common Rooms – Bathrooms and Kitchens

    Bathrooms and kitchens are high traffic areas. Check out these ideas to get these areas ready for the next tenant:

  • Work on an energy-efficient theme. Get rid of all non-essential electrical gadgets that increase your monthly utility bills.
  • Upgrade your kitchen countertops to a granite finish.
  • Create a kitchen island with all the bells and whistles for a contemporary look.
  • Switch to a walk-in shower instead of your current bathtub.
  • Install a trendy showerhead, faucet, and storage facilities for your bathroom.

    • The Outdoors

    real estate managementFinally, your curb appeal matters to a new tenant. It is what creates the first impression of the property. You can:

  • Clear out any overgrown grass and weeds in the backyard.
  • Bring in new batches of plants and flowers.
  • Define your walkways with flagstones.
  • Incorporates a centerpiece sculpture at your parking area with ample lighting to highlight it.
  • Add bird baths for that early morning chirping
  • Insist on creating a symmetrical effect around your doors, windows, roofs, and outdoor furniture.

    • Final Verdict

    Note that the best way to prepare your home for your next tenant is by making it a clean and functional dwelling. Tenants are more concerned about their safety, health, and convenient living. For this reason, it is important if you get innovative with the latest trends in home remodeling.

    Where you need professional help, make Premier Business Investments your choice property management company. We manage various rental properties including, patios, condos, and single-family homes in Arizona. Plus, we offer maintenance and rent ready repairs services. Then, get in touch for any clarifications about preparing your home for a new tenant.

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    Showing and Marketing Your Rental Property during COVID-19

    The COVID-19 outbreak is presenting unprecedented challenges to property owners—the virus did not get notice that vacant property still needed to be filled. With social distancing guidelines in place, it is very risky and daunting owners questions to showcase rental homes to potential tenants. However, the “stay-at-home” orders are exempting key real estate activities, particularly property viewing, since residents still need to locate ideal places to put their heads. Before showing and marketing your rental property, it is important to check your state or local restrictions on real estate activities that protect landlords and their potential tenants. In this blog, we share ideas on how to effectively and safely show and market your rental property during the pandemic to limit the risk of illness exposure.

    Local Leasing Channels and the Use of Technology

    covid-19 real estateWhen leasing a home, innovation and technology are crucial for every property owner. Even without considering the COVID-19 crisis, investing in technology always comes in handy, especially during an emergency. Although tenants may still want to rent homes, they may not be comfortable going to view the property in the presence of a leasing agent. Thus, a lot can be done by the property owner to ensure that their viewing is still conducted, ranging from providing hand sanitizers and masks to using smart keys and lockboxes that enable tenants to view property even without the presence of an agent.

    With technology, tenants can eliminate “in person” contact during a property viewing. For instance, questions regarding the property can be answered via a phone call, while apps like Zoom and Skype could help to arrange for interviews with potential tenants. As for showing the property, property owners could use online photos and property management apps and software to show the property virtually, evaluate applications, and sign the leases even without meeting the tenant in person. Furthermore, deposits could be collected through Venmo, Zelle, and PayPal.

    Online Advertising

    online real estate advertisingIt is also the job of property owners to ensure that their property is marketed to potential tenants. And the COVID-19 crisis has changed the property listing processes; tech-savvy investors are now listing their homes online, giving video tours online, and investing in quality property photographs. Property owners have equally embraced the “green” business ideology, in which they use electronic signatures.

    Online marketing platforms can be used to reach a pool of tenants. As a homeowner, online marketing can help you get access to a large number of tenants who view your listings, schedule showings, and spend time knowing about the property. With the right technology resources, you can partner with plenty of residential tenant services to get your property listed on several sites.

    Social media also remains a significant property marketing platform. Locked down at home, many potential tenants spend most of their time on social media. First of all, ensure that you are present in all the social media channels that generate real estate leads. Understand the format and type of content that every platform uses to create unique posts. As a property owner or real estate agent, you should also include the right hashtags with every post, as this will boost your marketing efforts. Generic hashtags such as #realestate, #homestolet, #housestorent will help to expand your reach to property buyers.

    Application and Leasing During the Crisis

    coronavirus house rentingWith the low demand for housing, no property owner wants to delay the leasing process. Everyone wants their home to get rented, and tenants want to move to a well-maintained clean home. You should, therefore, make sure that your application is completed online, and the process of sending supporting documents such as pay stubs and driver’s license should be easy for all the tenants. With paperless leasing, you will not have to worry about printing papers, filling forms, making copies, or manually distributing the forms.

    Conclusion

    Amidst the COVID-19 crisis, tenants still want to view and rent a property. But they won’t want to risk their lives by hanging around a leasing agent. Premier Business Investment allows you to learn how to give your tenants a complete tour of your home alone. The company will also give you a range of technology products that will support your showing and viewing processes. Premier Business Investment ensures that you have an efficient home leasing process that is exposure-free.

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