Tax deductions every real estate investor should know about

On Behalf of | Jul 28, 2023 | Real Estate Transactions | 0 comments

As a smart investor, you have probably done some research on real estate investing. You may know all the ways you can increase your net worth and earn a residual income.

However, did you know that you can significantly reduce your tax burden through real estate investments? These are some deductions you should know about.

Business expenses

You should treat your real estate investing as a business. You can even start a formal business to protect your personal assets from business liabilities. Many of the expenses you encounter during the startup process, including paying for your business license and legal expenses, and while you run the business, such as accounting fees, employee salaries, equipment and furniture purchases and marketing costs, are eligible for deduction.

Property management and maintenance fees

As you purchase more properties, you will likely hire a property manager. Even if you hire family members, anything you pay these individuals or companies is a business expense. You can also deduct any service or maintenance fees you incur, such as landscaping, pest control, cleaning, gutter cleaning, painting or HVAC service.

Travel expenses

You should diversify your investment type, but when you get some experience in real estate, you should also diversify your specific investments. You may have properties in different cities and states. When you travel to search for, check up on and manage your properties, you may have to pay for fuel, airplane tickets, rental cars, meals and accommodations. When you spend time on your vacation or business trip on your investment properties, the expenses you incur become business expenses that you can deduct from your taxable income.

These are only a few of the numerous expenses you can use to reduce your taxable income. Learn about all of them to make the most of your investments.