For inexperienced landlords, the responsibilities associated with Asheville property management can be overwhelming. Instead of risking lawsuits or legal action, landlords can opt to hire professional Asheville property managers. Additionally, the IRS allows property management fees to be tax deductible. There are several other tax-deductible benefits for property owners.
- Mortgage Interest-Typically a fifteen- or thirty-year gift that keeps on giving, mortgage deductions allow landlords to write-off mortgage interest payments. Provided any cash-out refinances are reinvested back into the property, in the form of upgrades or maintenance, the IRS may permit points and loan origination fees to also be deducted.
- Insurance and Utilities -Homeowners do not have the advantage of writing off insurance premiums. However, landlords can write off insurance, maintenance expenses, and even utility costs for rental income properties.
- Depreciation – Often misunderstood, since rental properties are considered a business asset, the IRS allows them to be depreciated over a number of years. This is often overlooked, as rental properties typically appreciate with property value gains. Since the IRS considers them assets, the tax code allows income-producing chattels to be legally depreciated.
While the IRS permits the aforementioned deductions,they are subject to not exceeding the amounts of rents received. For landlords that are in lower income brackets, these losses are deducted from income and can result in a refund. As incomes increase, or unless someone qualifies as a real estate professional or developer, these losses are generally phased out.Fortunately, some losses can be applied to future years, helping offset profits and gains.