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Cashing Out ... What Is Your Business REALLY Worth?
Question: What is your business REALLY worth? Answer: Whatever someone else is willing to pay for it at the time. That's a true statement as far as it goes but it doesn't take into account that the way you arrive at a value for your business can ...
CRM...And The Real World - Part 2.
Here is my latest article. It may be freely used in ezines, on websites or in e-books, as long as the Resource Box is left intact. I would appreciate notification of where it was used, and if possible, a copy of the ezine or newsletter that it was...
Development Procedures for Building Effective Management Systems: Phase III
You have permission to publish this article free of charge, as long as the resource box is included with the article. If you do run my article, a courtesy reply to sean@bizmanualz.com would be greatly appreciated. This article is 592 words long...
How do you Find a Topic to Speak On?
People are always looking for solutions to their problems. Do you have an expertise that can help people solve their challenges and frustrations? Ask people to see what bothers them. Find out what they need to achieve their goals. First,...
Stop Debt Collectors
Can you stop debt collectors ? . . .You better know you can
You can stop debt collectors under the law provided by the Fair Debt Collection Practices Act. If you use credit cards, owe money on a personal loan, or are paying on a home...
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Rental Property Tax Deductions
Own residential rental properties? This article discusses how income from those properties impacts your taxes.
What Constitutes Revenue?
Generally, rental income is defined as any revenue you receive from the occupancy or use of residential property. Rent, obviously, is included in that revenue. Many owners are surprised to learn revenue also includes rent advancements, expenses paid by a tenant and any security deposits not returned to the tenant. In fact, revenue can also include amounts paid to cancel a lease, even if you had to sue the defendant to get it.
Yeah, Yeah, But What Can I Deduct?
Tax deductions associated with rental properties are strikingly similar to those found in any business. Technically, you can deduct any expense reasonably necessary to “manage, conserve or maintain” the property. Obvious deductions include mortgage payments, cleaning expenses, insurance premiums, service payments such as landscape maintenance, repairs, maintenance, etc. Overlooked rental property deductions include:
1. Expenses incurred in finding tenants,
2. Commissions paid to third parties that arrange for tenants,
3. Paying your accountant and/or lawyer,
4. Mileage for driving to and from the property [I
said, “No more parties!”]
5. Depreciation of the property,
6. Depreciation of items in the property such as washing machines, furniture, etc.
Imaginary Rent Deduction
A few creative property owners have suggested that they should be able to deduct their customary and standard monthly rent if the property is empty. The argument goes, “If the property is empty, I am not making revenue and should be able to deduct the $1,500 that I am missing out on.” At first glance, this almost makes sense. Sadly, it doesn’t fly from the perspective of the IRS. Since you are not receiving revenues, your total revenues for the year will be reduced by the loss rent. You can’t double dip by deducting the $1,500 from the already reduced yearly revenues. The only things you can deduct are the expenses you incur during this period, and only for so long as you are actively trying to rent the place.
Rental properties are a great investment. Even more so if you stay on top of your taxes.
About the Author
Richard Chapo is CEO of Business Tax Recovery - Obtaining tax refunds for small businesses by finding overlooked tax deductions and credits through a free tax return review.
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