Tax Advantages of Investing in Rental Property
If you decide to use your property as a rental property, you gain certain tax advantages over and above those of a second home. Of course, this will, by law, limit your personal use of the unit. A brief list of advantages follows. Please keep in mind that these advantages may change according to your income and personal tax situations. You should consult with your personal tax consultant or CPA.
- Interest paid on mortgage
- State property tax
- City and county taxes
- Rental commissions paid
- Unit repairs
- Unit cleaning
- Condo fees
- Depreciation of rental unit
- Depreciation of rental unit furniture
- Rental license cost
- Advertising cost
- Unit supplies
The items above are subtracted from the rental income realized and the difference becomes your positive or negative cash flow from your rental investment.
We have a computer program which will compute the above information for you so that you can determine if the property you are interested in is the correct investment for you. In addition, we can also run a sample property settlement sheet. With this type of information, you can better select the right property for you.
Don't let these tax advantages pass you by; investors have been using these tax advantages for many years.