Single Family Home Rentals

The investment world has caught on to the high rents many are paying around the US to rent a single-family house, as opposed to an apartment or townhouse, the more traditional arena of renters. Even a subsidiary of J P Morgan Chase recently bought out an entire single-family subdivision comprising single family homes. The individual single-family home bought as an investment was usually the 'turf' of smaller investors and individuals, but word is out....


Individual home buyers competing with deep pocketed all cash investors are at a disadvantage. This depletes already limited inventories. A growing developer focus on rental housing is happening at the expense of the inventory needs in the for-sale markets. Renters mostly spend less on furnishings and renovations/upgrades, landscaping, etc. that fuel the economy.


The tax benefits to landlords are mostly much better than those for homeowners. Renters get virtually no tax breaks. While the federal government does not allow taxpayers to deduct rental payments from federal income taxes, homeowners could get a tax deduction from interest paid on mortgage, property taxes, improvement costs and capital gains, however, few taxpayers take the mortgage interest or property tax deductions since they’re rarely worth more than the standard deduction.


Here are some tax breaks for landlords:

  1. You can deduct mortgage interest you pay on a loan used to buy or improve your rental property.
  2. Property taxes paid on a rental property are generally tax deductible.
  3. The cost of rental property (excluding the land) is considered to decline over time, and this decline in value can be deducted each year as a depreciation expense.
  4. Expenses related to maintaining and repairing a rental property are generally tax deductible.
  5. Insurance premiums paid for a rental property are generally tax deductible.
  6. Professional Fees paid to a property manager, bookkeeper, or other professionals for services related to the rental property are generally tax deductible.
  7. Travel expenses: If you need to travel to your rental property for business purposes (e.g., to make repairs, meet with tenants), you may be able to deduct some of your travel expenses.
  8. Operating Expenses: Purchases made for supplies or subscriptions for managing your rental properties are tax deductible.  This can include office supplies like pens, paper, ink, legal forms, or management books.  And also subscription-based services like phone bills or web-based property management software.
  9. Cosmetic Upgrades - painting shutters, power washing, or doing some landscaping - are also tax deductible in the current year?
  10. Any money you spend advertising your property for rent is deductible, whether online, print, or radio.

If you're a landlord, your deductions have an upper limit - but luckily, it's quite generous! You can typically subtract up to $25,000 from your rental property income. And then let's not forget 1031 exchanges that allow you to defer capital gains taxes..... LOTS of incentives to build and own rental properties instead of selling them.


Call 659-218-6400 or any of our Palermo Properties agents for more info on rental investments.

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