Business Management

4 Helpful Tax Tips for Overwhelmed Landlords

Expertise: Landlording & Rental Properties, Real Estate Investing Basics, Personal Finance, Real Estate News & Commentary, Business Management, Real Estate Deal Analysis & Advice, Real Estate Marketing, Mortgages & Creative Financing
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For landlords who don’t have much experience, the first few tax seasons can be incredibly overwhelming and stressful. And though you can always hire an accountant to handle your taxes, it’s wise to study some of the key principles so you can make strategic decisions throughout the rest of the year.

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4 Tax Tips to Lighten Your Load

The complicated nature of the IRS tax code can make the filing taxes quite a challenge, especially for landlords who often have fragmented expenses, multiple properties, and unusual investments and revenue streams. When you recall that every state has different rules and qualifications, that means you’re not going to be able to find easy answers by searching Google.

As you prepare to file taxes for the last fiscal year, here are some tips that may help to lighten your load.

1. Understand current versus capital expenses.

IRS tax rules don’t just cover what can be expensed, but also when it can be deducted. Some expenses are deductible in the year during which they’re incurred, but others are deducted gradually over a number of years.

In order to know how an expense should be treated, you need to know whether it’s a current expense or capital expense. Current expenses refer to everyday costs of doing business. Things like maintenance, utilities, insurance, and advertising would fall into this category.

Capital expenses have to do with improvements and long-term investments that typically improve or extend the life of a home or property. This would include something like a $10,000 kitchen remodel.

2. Recognize when you can write off mortgage interest.

If you have mortgages on your rental properties, then you're probably paying a pretty hefty amount of interest every year. Knowing when you can and cannot write off mortgage interest could represent a difference of thousands of dollars.

According to, “You must use the property for at least 14 days each year, and you can only deduct interest for one primary and one secondary home. The property must have sleeping, cooking and toilet facilities, and properties that qualify include primary and secondary homes, trailers, condominiums, mobile homes and boats.”

3. Take the home office deduction.

Today, when remote working is hugely popular and a large portion of the population works from home, claiming a home office deduction is easy. Assuming you have an office in your home where you conduct at least some business activity, you’ll just have to decide between the two options: simplified version and actual expense deduction.

4. Document and deduct travel expenses.

Many landlords don’t even think about tracking their travel expenses, so they miss out on saving hundreds or thousands of dollars a year.

“If you have your own automobile for local travel, you can take your deduction using either the standard mileage rate or using the actual expenses incurred, such as the cost of gasoline and maintenance on the vehicle. You can also deduct parking fees and tolls, interest on a car loan and any applicable registration or license fees and taxes," real estate investor Erin Eberlin explains.

“If you do not have your own vehicle, you can deduct your public transportation expenses for business purposes.” The key is to be meticulous about how you track your travel expenses. There are lots of handy apps out there that make recording your mileage a breeze.

Don’t Cut Any Corners

Just because we see some leniency about calculating expenses and claiming deductions, it can be tempting to be liberal with yourself when filing your taxes. But there’s very little value in cutting corners or skirting the truth.

You’ll enjoy much greater peace of mind—and fewer inquiries from the IRS—if you play it cautiously and document everything with care.

What deductions will you be taking advantage of this year?

Comment below!

Larry is an independent, full-time writer and consultant. His writing covers a broad range of topics including business, investment and technology. His contributions include
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    James Gorman4
    Replied over 2 years ago
    Owners of “income property” interested in disposal of it thru Purchase & Sale would be well advised to get familiar with both IRS 1031 & IRS 721 exchange requirements. Capital gains, depreciation recapture, medical tax (previously OBAMA care), excise taxes, and other fees can lead to the owner getting in the order of sixty (60) cents on the dollar of a P&S agreement.
    Brian Grant Rental Property Investor from Lake Arrowhead, CA
    Replied over 2 years ago
    Great article, I just purchased my first rental last July and got a renter in it by mid December. After reading and listening to anything from biggerpockets I could find on taxes, I finally finished prepping the tax packet for the tax company. Reading your article made me feel that I did do a good job. Thanks.
    Replied over 2 years ago
    tread carefully…I bought 2 rentals in 2015 and 3 years later I’ve lost more money than gained and I’m actually doing hardship withdrawals from my 401k just to pay my rent
    Camilla S. Rental Property Investor from Indiana
    Replied over 2 years ago
    We’ve never taken the home office deduction in 6+ years of running our rental company. Does anyone really and truly EXCLUSIVELY use an office ONLY for business? I find that so difficult to believe and thus, my husband says we cannot deduct our office space because we use it for a lot of things other than just business. I’d love an accountant to set us straight!