12Law Arrow 12Law Arrow  Easy Questions  
12Law Arrow 12Law Arrow Instant Legal Documents
 
 
FINANCIAL & MARITAL

Cohabitation Agreement coming soon!
Separation Agreement coming soon!
No-Fault Divorce coming soon!
Bankruptcy coming soon!
 
 

Tax Deductions for Landlords in Zip Code 59801

Tax Deductions for Landlords in Zip Code 59801


I would uphold the law if for no other reason but to protect myself.
 
- Thomas More


Owning a rental property can be a rewarding venture because of its many tax deduction features. The US government lets land owners and landlords deduct certain expenses on their taxes that can offset their assessable income.

Landlords are likely to have tax due to depreciation, which is a non-cash expense. Residential buildings are depreciated over 27.5 years and commercial buildings over 39 years. However, your ability to actually deduct rental tax losses may or may not be postponed by the passive activity loss (PAL) rules.

The default treatment of tax losses from owning rental real estate is to consider them passive activity losses (PALs). That's unfavorable because you can only deduct PALs to the extent you have passive income from other sources (such as income from other rental properties or gains from selling rental properties). Excess PALs are suspended until you have enough passive income to deduct them. You can also deduct suspended PALs when you sell the properties that generated the PALs.

There are two taxpayer-friendly exceptions to the PAL rules: 1) for active investors - owning a 10% or greater stake and at least making management decisions like approving tenants, signing leases, authorizing repairs, and so forth; or 2) for real estate professionals - spending over 750 hours during the year in real estate activities including non-rental activities such as acting as a realtor or real estate broker) in which you materially participate. In addition, the hours you spend on real estate activities must exceed 50% of all the time you spend working on personal service activities.


Common tax Deductions for Landlords

Expenses can be deducted if they belong to ordinary and necessary in the line of business:

• Ordinary Expenses. This refers to "common and accepted" within the industry.

• Necessary Expenses. This refers to "helpful and appropriate" expenses for the business.

Points of Caution

• If you want to claim any deductions to your taxes, you must keep a detail and accurate records of the expenses.

• Even if this is common tax deductions, this is not applicable to all landlords, rental property owner or property investor.

Common Tax Deductions

• Depreciation. These expenses refer to the things purchased for the business which is still useful beyond the current tax year. It has to meet three rules :

o It should last more than a year

o It should be of value to the business

o Wear out or lose its value over time

Examples of depreciated assets:

o Purchase price of the property

o Improvements done in the property

o Added fences or shrubbery

o Appliances or furniture

o Car for business use


• Passive Activity Losses. This limits your ability to claim losses that have incurred in passive activity from other types of income. Having a rental property can be considered as a passive activity, unless you are an active investor or a real estate professional, as described above.

• Repairs. These are work necessary to keep your property in good working condition. Painting can be part of the repair. These upgrades do not add value to the property. Not all maintenance done in the property is considered repairs. Be aware that IRS makes distinction between improvement and repair. Improvements can add value to the property and cannot be deducted in full in the year they incurred. Improvements in property will be capitalized and depreciated over their useful life.

• Travel Expenses. This refers to long distance and certain local travel expenses as long as they are business related. It does not include the daily traveling from your home to your place of business.You can take deduction when you have a car using standard mileage rate or using the actual expenses incurred such as depreciation on the vehicle, gasoline and vehicle maintenance and other vehicle related expenses. Public transportation expenses use when conducting business can also be deducted when you do not have a car.


• Interest. You can deduct the interest on paid business related expenses.

• Home Office. If you use part of your home as an office you can deduct it as part of a home office deduction. The amount depends upon the percentage of the home office takes up from your home.

• Entertainment Costs. These are cost incurred during business dealings.

• Legal and Professional Fees. Hiring a professional to do work for the business allows you to deduct the fees paid them.

• Employee Compensation.You can deduct the wages to pay employees involved in running the business as business expenses.

• Taxes.Property tax, real estate taxes and sales taxes on business related items that are not depreciable for the year can be deducted. You can also deduct fees for tax advice and the preparation of tax forms related to the real estate property.

• Insurance. Premiums paid for commercial insurance, liability coverage, health insurance for employees, etc. can all be deducted.

• Casualty Losses. Damage to property that happen during a catastrophic event like fire can be part of the deduction.

Other Common Tax Deductions Include:

• Advertising costs

• Rent paid to others

• Telephone calls related to your rental property activities

• You can credit or deduct expenses paid to make your property accessible to individuals with disabilities or the elderly

 
Personalize & Print a Free MT Last Will Create This Document
Page 1
Page 2
Page 3
Page 4
Page 5
Page 6
Page 7
Page 8
Page 9
Page 10
 
Personalize & Print a Free MT Living Will Create This Document
Page 1
Page 2
Page 3
Page 4
Page 5
Page 6
Page 7
Page 8
Related Legal Services near Zip Code 59801
Fagan Christopher
1821 South Ave W # 300
Missoula, MT 59801
(406) 721-9700
Attorneys, Legal Service Plans
Erickson Robert
1821 South Ave W # 300
Missoula, MT 59801
(406) 721-9700
Attorneys, Tax Attorneys, Mediation Services, Legal Service Plans, Admiralty & Maritime Law Attorney
Johnson Chris A
1821 South Ave W # 102
Missoula, MT 59801
(406) 721-9700
Attorneys, Legal Service Plans
Mungas
1821 South Ave W
Missoula, MT 59801
(406) 721-9700
Attorneys, Legal Service Plans
Reely Shane N
3819 Stephens Ave # 201
Missoula, MT 59801
(406) 541-9700
Attorneys,  Tax Attorneys,  General Practice Attorneys,  Legal Service Plans
Rhoades Quentin M
1821 South Ave W # 300
Missoula, MT 59801
(406) 721-9700
Attorneys
Shoquist Liesel
1821 South Ave W
Missoula, MT 59801
(406) 721-9700
Attorneys, Legal Service Plans
Sullivan Zane K
1821 South Ave W # 300
Missoula, MT 59801
(406) 721-9700
Attorneys
Tabaracci John K
1821 South Ave W # 102
Missoula, MT 59801
(406) 721-9700
Attorneys
Wagner Nathan B
1821 South Ave W # 102
Missoula, MT 59801
(406) 721-9700
Attorneys, Legal Service Plans
Hess-Homeier M Joan PHD
445 S 5th St W
Missoula, MT 59801
(406) 549-9611
Attorneys, Landlord & Tenant Attorneys, Real Estate Attorneys, General Practice Attorneys, Legal Ser
Hess-Homeier Ted
445 S 5th St W
Missoula, MT 59801
(406) 549-9611
Attorneys,  Landlord & Tenant Attorneys,  Real Estate Attorneys,  General Practice Attorneys,  Legal
Geer Suzanne
1615 S 3rd St W
Missoula, MT 59801
(406) 549-9524
Accident & Property Damage Attorneys,  Attorneys,  Family Law Attorneys,  General Practice Attorneys
Skjelset Doug G
1615 S 3rd St W
Missoula, MT 59801
(406) 549-9524
Attorneys,  Criminal Law Attorneys,  Social Security & Disability Law Attorneys,  Accident & Propert
Marsillo & Schuyler
103 S 5th St E
Missoula, MT 59801
(406) 543-8261
Estate Planning Attorneys,  Attorneys,  Criminal Law Attorneys,  Family Law Attorneys,  Divorce Atto
Binney Law Firm P C PC
1001 S Higgins Ave
Missoula, MT 59801
(406) 541-8020
General Practice Attorneys,  Attorneys,  Legal Service Plans,  Bankruptcy Law Attorneys
Fletch Law P PC
612 S 5th St W
Missoula, MT 59801
(406) 541-7307
Social Security & Disability Law Attorneys,  Attorneys,  Accident & Property Damage Attorneys,  Corp
Fletch Law P
523 S Orange St
Missoula, MT 59801
(406) 541-7307
Insurance Attorneys,  Attorneys,  Social Security & Disability Law Attorneys,  Personal Injury Law A
Stevenson, Mathew M Stevenson Law Office
1120 Kensington Ave # B
Missoula, MT 59801
(406) 721-7000
Attorneys,  Criminal Law Attorneys,  DUI & DWI Attorneys,  General Practice Attorneys,  Legal Servic
Shaffer Law Office
405 S 1st St W
Missoula, MT 59801
(406) 543-6929
Attorneys, General Practice Attorneys
Badaruddin Shandor S
736 S 3rd St W
Missoula, MT 59801
(406) 728-6868
Attorneys
Moriarity Badaruddin & Booke
736 S 3rd St W
Missoula, MT 59801
(406) 728-6868
Attorneys
Shandor S. Badaruddin, Attorney
736 S 3rd St W
Missoula, MT 59801
(888) 811-6626
Litigation & Tort Attorneys,  Attorneys,  Accident & Property Damage Attorneys,  Personal Injury Law
Graham Law Firm
1008 South Ave W
Missoula, MT 59801
(406) 541-6444
Attorneys, General Practice Attorneys, Corporation & Partnership Law Attorneys
12Law.com   |  NASHVILLE, TN USA   |  CONTACT US