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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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    11 Reasons to Rent in Gilbert, AZ

    Once called the “Hay Shipping Capital of the World,” Gilbert, AZ is one of the most beautiful places to live. With its history and claim dating back to the early 1900s, the community has always been for those who love golfing, the great outdoors, and unique wildlife. Thanks to a variety of national parks and preserves, Gilbert is a dream for those who love to get lost in nature and go for a hike.

    So why rent here? Besides the beautiful area, the area can save you on housing costs and offers some other benefits as well.

    Should You Rent in Gilbert, AZ?

    1. Proximity to Big City Phoenix

    If you want to live close to Phoenix but without the rent costs, Gilbert, AZ is the perfect place to build a town. It’s still part of the greater Phoenix metro area, and the town has rapidly grown in the past 20 years. However, Gilbert still has that small-town homey feel to it.

    2. Safe and Affordable

    Gilbert was ranked as one of the top 25 cities to live in based on safety, low crime, and beautiful scenery. With both suburban and rural settings, there are also plenty of fun neighborhoods in this area, or you may want to rent a house with acreage. Many options are available in this area.

    3. Amazing Food and Atmosphere

    arizona foodGilbert is home to Agritopia, which is in the center of town. This community surrounds an 11-acre organic farm that is owned by the Johnston family. The farm was initially created to provide fresh produce in a village setting. Now it’s become a smart, self-service farm store oasis with fresh produce, restaurants, and craft beer brewed on-site.

    There are also other restaurants in the Heritage District that offer more trendy and delicious offerings, such as barbecue and burgers. There are also Mexican and Italian restaurants located in Downtown Gilbert. You also should stop by TOPO Arizona for an amazing ice cream cone.

    4. High-Quality Local Craft Beer

    It’s hard not to stop by Agritopia and check out the unique bars and brewery in this spot. Any property manager Gilbert AZ would dare you to try the Hazy Cat Lady at 12 West Brewing Co, or you can stop by Barnone on Ray Road. There’s also Flying Basset Brewing, which offers an array of craft beers and delicious food.

    5. Variety of Shopping and Entertainment

    There’s always something to do in Gilbert, whether you head to San Tan Village or want to head to the movies. Gilbert has family fun and adventure, such as “Right on Target” clay shooting and paintball arenas.

    6. Immaculate Golf Clubs

    Arizona is easily one of the best states for golfing. There are so many golf communities around Phoenix as well. Gilbert is home to a number of golf clubs as well as unique establishments like TopGolf. The Western Skies Golf Club is well known for its beautiful greens and difficult course.

    7. Performing Arts

    The original Hale Theater in California was brought to Gilbert by the Hale family. Today, there are some amazing theater groups that travel through Arizona and stop by this beautiful and historic theatre in downtown Gilbert. The venue became even more popular in recent years, resulting in an expansion in 2019.

    8. Ah, the Great Outdoors

    There’s something for everyone if you love to hike and seek adventure around the corner. The Gilbert Riparian Water Ranch is a well-known water and wildlife habitat that’s fun to hike since it’s a bird paradise. There are over 300 different species of birds living along trails and rivers.

    9. Decent Nightlife

    arizona nightlifeYou’ll find most people hang out at Dierks Bentley’s Whiskey Row in Heritage District. This chain restaurant may be familiar as it’s also located in Scottsdale and Tempe. The White Rabbit Speakeasy is another place to visit in the area, but the exact location is kept a secret. You’ll have to check the website to get into this iconic bar with to-die-for cocktails.

     

     

    10. Biking and Walking Trails

    In addition to the unique wildlife areas and preserves, there are some long biking and hiking trails that are perfect for adventurers. These include the San Tan Vista Trail, Marathon Trail, and Heritage Trail. However, the Western Powerline Trail runs across town, and it’s the most fun for those who love to bike their way around town.

    11. Fun for Kids

    The best part about Gilbert is that its family-friendly and doesn’t take itself too seriously as a small town. There are a ton of things to do for kids of every age, including laser tag, arcades, VR games, and even a laser maze located at FlipSide. There are also some theme parks in the area, such as the Enchanted Island Amusement Park in Phoenix.

    Looking for a Place to Rent in Gilbert, AZ?

    Premier Business Investments can help you find the perfect property. We manage the top real estate in the area and know where the best neighborhoods are. Talk to us about pbiaz.com and finding your dream home.

    Need property management in Gilbert, AZ? We’d love to share our approach to providing the best care for your tenants and properties. How can we serve you?

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