Landlord Tax 101: A Guide for Property Owners

Landlord Tax 101: A Guide for Property Owners

Did you know that every year, unpaid taxes make up three-quarters of the federal budget? 

Tax fraud is a federal crime, whether committed knowingly or in ignorance. Landlord tax is one of the biggest contributors to tax fraud, as it is easy to hide the income tax from the IRS.

However, upstanding citizens will do their best to pay their taxes in full.

Do you want to learn more? Keep reading!

Property Ownership: Do Landlords Pay Tax on Rent

Property owners who rent out a building have to pay tax on their rent, known as the landlord’s ‘income’.

Generally, properties let out to tenants are treated as ‘business assets,’ not as your private home – this means there are income tax and corporation tax implications. However, as you are running a business, your tax obligations are the same as any other business.

Tax and Record-Keeping: Landlord Tax Document

When you make both business and personal purchases to improve the building, keep a record of them. This will help you if the building is let out for long periods of time and you have to work out the average cost of this capital expenditure on the property.

You should keep a record for each period of ownership and for each period of renting. If the property was purchased after 6th April 2015, there may be additional rules to follow.

Tax Calculations: Landlord Tax Deductions

When you are an owner-occupied property landlord, there are several extra costs you will have to factor in when doing your tax return. These include wear and tear on furniture, furnishings, and equipment and how these costs are calculated.

Other items can include the maintenance of the property, such as plumbing, heating, and electrical work. As well as cleaning, gardening and any outgoings, such as insurance, local authority taxes, and utilities.

If you are letting out a building with a parking space, you may also have to pay tax on it, so any maintenance related to that can be deducted.

When you are filing a tax return, make sure you have the correct forms for the IRS. 

Property Management: How Can We Help

If you want to know more about landlord tax, property management software such as Home River Group is useful.

We can provide you with a low-cost, easy-to-use property management system to help you keep track of your properties, tenants, and the income you receive from renting out the properties.

Additionally, our associates can provide you with professional issues with all aspects of your property, including evictions, rental agreements, and more.

Landlord Tax: Do It Right

As you can see, filing your landlord tax can be quite... taxing. However, this quick guide will get you headed in the right direction.

We provide full services for landlords and tenants in all aspects of real estate, from the purchase of property to selling it or leasing it.

Are you in need of property management? Get a free rental analysis today!

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