Are fees paid to a Property Management Company for managing my property tax deductible? The answer is yes.
For those of you who are new to real estate investment, it is important to have a good understanding of the following tax deductions/tax write-offs associated with income producing rental properties.
All Operating Expenses incurred during the operation and maintenance of an income producing property are tax deductible. They include such things as property management fees, property taxes, repair costs, salary and wages, snow removal service, misc. supplies, telephone, trash removal, vehicle mileage expenses, utilities, accounting fees, advertising costs, legal fees, insurance premiums, janitorial service, lawn maintenance service, leasing commissions, license fees, office supplies and expenses, pest control, etc.
All Mortgage Interest paid on loans secured by income property is tax deductible.
Closing Costs incurred for with the purchase of an income property such as title search fees, title insurance, appraisal fees, loan application fees and recording fees are deductible in the year of purchase.
Depreciation is the loss in value of an asset or building over time due to wear and tear, physical deterioration and age. The IRS allows you to depreciate income producing properties over their useful life which is determined by law.
Capital Improvements are subject to the same depreciation method as the building above. Capital improvements are things such as a new roof, new siding, new windows, a new addition to a building, etc. Capital improvements to a residential income property are depreciated over a period of years.
The information contained on this page is not intended to be legal or professional tax advice, consult a professional tax advisor or the Internal Revenue Service for more information on allowable tax deductions.
