Thanks to ShoptAtHome.com and H&R Block for partnering with me on today’s post. All thoughts and opinions are my own. The information offered below is not intended as legal advice, nor is it guaranteed as tax laws can very state by state. Professionals at H&R Block can help answer any tax-related questions you might have!
Tim and I are in the same boat as hundreds of thousands of other people in the United States who would love to sell their home, but aren’t yet able to due to the recession and subsequent housing market bloat. We refer to ourselves as “reluctant landlords.”
We are actually quite lucky, all things considered, because we have amazing renters who take excellent care of the property and who are timely with their payments. Things certainly could be a lot worse. And as it turns out, there are some tax breaks that you should pay close attention to if you own a rental property, and I thought I’d highlight some of the ones we’ll be using as well as some others that may be applicable to you if you had to find new renters in 2014.
How to Claim Rental Property Tax Deductions
When you are filing your taxes, you use the Schedule E form to claim your deductions for the rental property. Having receipts is key, so don’t forget to save them all, and to keep records throughout the year. If you didn’t do that last year, learn your lesson and start now for your 2015 taxes.
What to Claim
Many of the tax deductions you can claim for your rental property relate to getting new tenants in the home. So any advertising you spend to raise awareness of the property is deductible. If you use an agent to help find renters, then the commission paid is also deductible. And if you hire a cleaning service prior to renters moving in or after renters move out, this is also a deductible expense.
Once you have renters in place, as we do, you can claim deductions for any maintenance expenses that you will incur as the owner, which is helpful. If the house has any sort of dues or fees required of it (such as a home owners association), those can be written off, as well.
Mortgage interest is something that we were told we wouldn’t be able to claim after 2 years out of our house, but I’ve been doing some research this week and what I’m reading indicates that you CAN claim your mortgage interest as a deductions for rental property (remember that I’m not a tax professional and consult with the pros at H&R Block for the final word on this). Friends, this is VERY exciting news to me, and will really help us out with our tax bill!
The taxes you have to pay for your property each year are also deductible. Our rental home is in Memphis, which has some of the highest property taxes in the universe (at least it feels that way!). I will take that tax deduction with joy!
You can also deduct your insurance premiums, so be sure to have those totals you spent on hand when it is time to prepare your taxes so that you don’t leave them out. Every dollar matters and helps, friends.
Does the rent you charge include utilities? If so, hang on to your utility bills because those expenses are deductible.
If you live int he same area as your rental property, note the mileage on your car for every trip to the home for the purpose of working on maintenance, collecting rent, or showing it to prospective tenants. You can claim 56 cents/mile in deductions for those trips.
This list isn’t exhaustive, by any means, but it covers some of the more common deductible expenses associated with owning a rental property. I’m going to shave some money off my tax bill this year thanks to this list, and I hope it will help you, too!
Where to File
Just because you own a rental property and therefore will have a somewhat complicated return, that doesn’t mean that you can’t take advantage of filing at home using a service like H&R Block. Tim and I usually file at home and while the process takes some time, the steps are laid out in a very intuitive way so that you don’t worry about missing something! H&R Block is a great option because they have online services you can take advantage of, as well as brick and mortar services if you’d prefer to have some face time with a tax professional. We’ve used both services, ourselves, and have been pleased with the results. Online you’ll have access to real-time professionals who can get your questions answered. When you are ready to file, you can click a few buttons to submit everything online or you can print your information to file by mail. Either way, you get a maximum refund guarantee with H & R Block.
H&R Block stands behind their calculations to the point where if you receive any IRS penalties due to errors in your filing, H&R Block will reimburse you. Additionally, should you be audited, H&R Block will help you prepare for the audit and provide a tax professional to represent you in person, FOR FREE. Their commitment to you doesn’t end after you file.
Free Federal Filing and Cheap State Filing
If you have a simple federal return, H&R Block will file it for you FOR FREE. Boom! Additionally, right now you can get your state taxes filed for $9.99 which is their lowest offer of the year (so no need to wait for anything better…it won’t get better than this!).
Save Even More
While the $9.99 offer at H&R Block is the best deal you will find, using ShopatHome.com actually will help you save a little more! Go through their link to earn 12% cash back on your expenses at H&R Block. See? Tax season isn’t so bad, after all!