Taxes are unavoidable, but rental property tax deductions can help landlords save money. The saying goes that the only two certainties in life are death and taxes. No matter how hard you might try, you can’t avoid having to pay taxes — whether that be for products you purchase, on the income you generate or for public services.
Real estate investors have to pay taxes on rental income, as the IRS treats it like any other income.
At the same time, there are tax deductions for landlords that can reduce what landlords owe each year. Below, we’ll take a look at whether rental property management fees are tax deductible, and how landlords can maximize their deductions.
How Does the IRS Handle Rental Property Income?
Everyone’s tax situation differs, meaning they pay a different tax rate based on how much income they generate, how they generate their income, and how they receive payment—among other factors.
Whether you can write off certain expenses against your income also depends on your particular situation. Rental property owners will be happy to know that the IRS considers business expenses to be tax deductible, and since real estate investing is a business, some expenses related to the operation and management of that business can be deducted.
But are rental property management fees tax deductible in all cases? Just like with other types of business expenses, rental property owners cannot write off every cost they incur. How you handle your rental property and property management will determine whether you can write things such as property management fees off.
We will discuss this in more depth below, but it’s always good to also advise with an accountant if you’re looking for more guidance.
How Does the IRS Treat Property Management Fees?
Property management fees are a rental business expense and are always tax deductible.
These fees are among the most common and advantageous tax deductions for landlords, and it’s yet another reason why hiring an experienced, local property management company is so beneficial.
In addition to gaining local expertise and knowledge, and a partner who will be on your side helping you grow, the money you pay for your property management company can become part of your annual rental property tax deductions.
So, if you were on the fence about hiring a property management company, this fact might convince you it’s time.
You can write off other business expenses related to maintaining your rental property, including landscaping and repair work—as long as you pay an outside company to handle it.
What Other Rental Property Tax Deductions Can You Claim?
Remember that the rental property expenses you can write off, the amount you can deduct, and the requirements for doing so may vary from one rental property owner to the next.
That being said, most rental property tax deductions apply almost universally across the board. Some of these expenses include…
- Repairs: Expenses you incur related to repairs at your property are tax deductible. This includes many fixes including patching and painting.
- Travel: You can write off any travel directly related to reaching your rental property. If you don’t live in the same region as your rental property, this means you can write off airfare and car rental. If you live locally, it also includes driving to and from the property and to local stores for parts, etc. It’s important that you just make sure to keep all of your receipts.
- Insurance: Premiums associated with insurance policies you take out for your rental property also qualify as tax deductions for landlords.
- Legal Fees: If you hire any outside legal help, you likely will be able to deduct those fees on your taxes as well.
Partner with 1836 Property Management to Propel Your Business Forward
As a real estate investor, there are many rental property tax deductions available for you to take advantage of. One of the most advantageous are property management fees.
Since these fees are directly related to your rental property — i.e., your business — the IRS considers them to be business expenses. There are many other tax deductions for landlords, but you need to know what they are and how to do it.
This is just one of the many reasons why partnering with a local, experienced property management company works in your favor.
At 1836 Property Management, we consider all of our clients to be partners in real estate investing. As such, we act as advisors, helping them to understand things such as rental property tax deductions that they can take advantage of.
We also provide our clients with peace of mind, as they can rest assured that we are handling every aspect of property management for them, helping them to generate a solid return on investment.
You can find 1836 Property Management at 1704 ½ South Congress Avenue, Suite E in Austin, TX, or call (512) 994-4323.
For more information, please contact us today.
