Rental Property Tax Deductions

Own residential rental properties? This article discusses how income from those properties impacts your taxes.

What Constitutes Revenue?

Generally, rental income is defined as any revenue you receive from the occupancy or use of residential property. Rent, obviously, is included in that revenue. Many owners are surprised to learn revenue also includes rent advancements, expenses paid by a tenant and any security deposits not returned to the tenant. In fact, revenue can also include amounts paid to cancel a lease, even if you had to sue the defendant to get it.

Yeah, Yeah, But What Can I Deduct?

Tax deductions associated with rental properties are strikingly similar to those found in any business. Technically, you can deduct any expense reasonably necessary to "manage, conserve or maintain" the property. Obvious deductions include mortgage payments, cleaning expenses, insurance premiums, service payments such as landscape maintenance, repairs, maintenance, etc. Overlooked rental property deductions include:

1. Expenses incurred in finding tenants,

2. Commissions paid to third parties that arrange for tenants,

3. Paying your accountant and/or lawyer,

4. Mileage for driving to and from the property [I said, "No more parties!"]

5. Depreciation of the property,

6. Depreciation of items in the property such as washing machines, furniture, etc.

Imaginary Rent Deduction

A few creative property owners have suggested that they should be able to deduct their customary and standard monthly rent if the property is empty. The argument goes, "If the property is empty, I am not making revenue and should be able to deduct the $1,500 that I am missing out on." At first glance, this almost makes sense. Sadly, it doesn't fly from the perspective of the IRS. Since you are not receiving revenues, your total revenues for the year will be reduced by the loss rent. You can't double dip by deducting the $1,500 from the already reduced yearly revenues. The only things you can deduct are the expenses you incur during this period, and only for so long as you are actively trying to rent the place.

Rental properties are a great investment. Even more so if you stay on top of your taxes.

Richard Chapo is CEO of http://www.businesstaxrecovery.com - Obtaining tax refunds for small businesses by finding overlooked tax deductions and credits through a free tax return review.

In The News:

Does Amazon Really Pay No Taxes? Here’s the Complicated Answer  The Wall Street JournalDemocratic presidential candidates have seized on reports that Amazon.com Inc. paid no 2018 federal taxes as they press for changes in the tax system.
Budget 2019: Govt may ask 'loss-making' companies to pay tax  India TodayThe finance ministry is likely to propose a minimum amount of tax on loss-making companies in the upcoming budget or just after that. However, genuine ...
Is receiving money from friend through e-wallet taxable?  Economic TimesThrough e-wallets and UPI, it has become easy to send and receive money through your phone. Often, debts to friends may be settled in this manner.
House Democrat says current Congress may not see Trump taxes  ReutersA senior Democrat on a congressional panel seeking President Donald Trump's tax returns warned on Saturday that the current Congress may not see the ...
Filing Income Tax Returns? Avoid These Six Common Mistakes  News18From the intimidating number of forms available, to claiming deductions, in the last-minute rush to file income tax returns, make sure to keep in mind some details ...
G20 agrees to push ahead with digital tax  Economic TimesG20 nations have agreed to push ahead on compiling common rules to lock tax havens' door for tech giants.
Cut taxes to boost investments, growth, CII’s Kirloskar tells govt  LivemintThe Confederation of Indian Industries (CII) has called upon the government to lower a broad range of taxes to encourage equity investments by both individuals ...
Budget 2019: Follow these simple steps to reduce your taxable income under new rules  India TodayNot even a month is left for the announcement of full Budget 2019 and the government is all set to make effective new income tax laws that will benefit millions of ...
G20 to move ahead with plans for digital tax on world’s tech giants  The VergeThe G20 is pushing ahead with plans to close international tax loopholes used by tech giants. In a draft communique obtained by Reuters, the group said that it ...
Budget 2019 may consider re-introduction of tax-free bonds for infra PSUs  Business StandardThe 2019-20 Budget may consider re-introduction of tax-free bonds to raise capital for the infrastructure projects, sources said. Introduction of tax-free bonds to ...
New GST return forms to help authorities check tax evasion  LivemintNEW DELHI: Return forms proposed for the goods and services tax (GST) are set to put an end to one of the widely used methods for tax evasion—claiming ...
Pay first instalment of advance tax now  LivemintThe deadline to deposit the first out of total four instalments of advance tax for FY 2019-20 is on 15 June.Remember that you are just required to pay the advance ...
France Wants to Cut $1.1 Billion of Tax Breaks for Companies  BloombergFrance plans to eliminate tax benefits for companies worth one billion euros ($1.12 billion) from next year to help finance a pledged reduction in personal ...
DOJ releases legal opinion supporting Treasury refusal to turn over Trump tax returns  CNNThe Justice Department released Friday a new legal opinion supporting the Treasury secretary's refusal to hand over President Donald Trump's tax returns.
With growth wavering, I-T wants mopup target eased  Economic TimesCBDT has pitched a downward revised target from that presented in the interim budget to Sitharaman.
Lower Tax, Interest Rate, Healthcare: 10 Things India Wants Its New Fin Min to Address in Budget 2019  News18People, who commented on the online forum seeking suggestions for the budget, have wished that minimum exemption for income tax purposes be raised to Rs ...
I-T summons Naresh Goyal in tax evasion case  Economic TimesThe case is related to alleged irregularities in dealings between Jet and Dubai-based cos.
Treasury limits state, local tax cap workarounds  The ColumbianThe Treasury Department issued final rules Tuesday that would clamp down on taxpayers trying to circumvent a new cap on state and local tax deductions.
How to make full use of section 80D to save tax on health insurance?  Economic TimesHealth insurance is a necessity that can also help you save taxes. Generally, you can save tax on health insurance premium for a maximum of Rs 1 lakh in case ...
GST collection at ₹1 lakh cr in May below target, tax rate cut unlikely soon  LivemintGross collection at ₹1,00289 crore in May is lower than ₹1,13865 crore in April.A total of 72.45 lakh GSTR-3B returns were filed in May, higher than 72.13 lakh ...
Instead of locking in future tax cuts, we should increase Newstart and boost social housing  The GuardianNo one knows what will happen to the economy in three to five years. We need to own up to that fact and act accordingly.
How to quadruple the number of tax payers in India  Business StandardIndia's tax to GDP ratio is around 12 per cent currently. It used to be around 10 per cent till recently. Most people think even this 12 per cent is too low and that it ...
IT industry, startups meet Anurag Thakur to discuss data protection, tax issues  YourStoryAhead of the Budget, representatives of tech sector and industry bodies like Nasscom, IAMAI, and MAIT met Minister of State for Finance Anurag Thakur on ...
Nirmala Sitharaman should give tax benefits to common man, remove MAT in Budget: experts  BusinessLineIndustry chambers presses for reduction in corporate and personal income tax to help increase consumption and in turn promoting economic growth.
Task Force report on direct tax expected after Budget  Business StandardRead more about Task Force report on direct tax expected after Budget on Business Standard. The government may have quietly pushed a major income tax ...
Can today’s ultra-rich make peace with a wealth tax?  Financial TimesAstrid Lindgren, famous for writing such classic children's books as Pippi Longstocking, was less well known as a crusader against confiscatory tax rates.
Imran Khan follows PM Modi's footsteps, asks countrymen to pay taxes  India TodayPakistan Prime Minister Imran Khan urged the countrymen to pay taxes and reminded them to take benefit of the 'last' Asset Declaration Scheme launched by ...
Uber says IRS probing its 2013-14 tax returns  LivemintThe U.S. Internal Revenue *Service* is auditing Uber Technologies Inc's taxes for 2013 and 2014 and the ride-hailing company expects unrecognized tax benefits ...
Yes, Taxing the Rich Is Possible  The New York TimesThis article is part of David Leonhardt's newsletter. You can sign up here to receive it each weekday. For a long time, there was a predictable response to any ...
How Silicon Valley Avoids Paying Taxes Using Small Biz Break  BloombergSilicon Valley has won big with a tax break aimed at small businesses.
Opinion | Using the Singapore nudge in Indian tax law  LivemintMany years ago, on a vacation in Singapore, I was surprised to see the number of babies all over town. It looked like a baby boom in the city state. Cute, chubby ...
How tax efficiency varies across states  LivemintStudy shows that some states are more efficient in generating tax revenues than others.
Low jet fuel taxes, expansion of airports seen boosting aviation sector  LivemintMUMBAI: India's aviation sector, one of the fastest growing in the world, will need a push from the new government to achieve its potential. Former diplomat ...
How to tax sugary drinks  The EconomistSUGAR TAXES are on a high. Around 40 countries and seven American cities have started to tax sugary drinks, mostly in the past few years. Supporters say ...
Oil's Next Great Deflationary Force: Taxes  BloombergIn a commodity business, cost is king. The efficient producer ultimately wins more business and more investment – and that is as true for countries as it is for ...
Where does Colorado's marijuana tax money go? The state made a flow chart to answer the $1 billion question  The Colorado SunColorado officials announced Wednesday that marijuana tax revenue has now surpassed $1 billion since recreational sales began in 2014.
IOC, HPCL to contest over ₹4,000-crore tax demand  LivemintThe Director-General of GST in Pune has slapped IOC with a tax demand of ₹4002 crore.Hindustan Petroleum has been asked to pay over ₹346 crore.
CM Arvind Kejriwal raises statehood demand, hike in tax share at NITI meet  Times of IndiaChief minister Arvind Kejriwal raised the pitch for full statehood for Delhi and an increase in the share of central taxes at the fifth governing coun.
Cap personal income tax rate at 25 pc to boost demand: PHDCCI  Economic TimesNEW DELHI: The maximum personal income tax rate in the country should move towards 25 per cent to increase disposable income, thereby boosting demand ...
Tax saving tips: Invest in real estate and save tax on LTCG  Business StandardInvestments in real estate are borne out of savings made out several years of earnings. These investments have both monetary value and emotional value for ...
Budget 2019: Slashing tax rates is a good way to boost collections; here’s why  The Financial ExpressUnion budget 2019 India: Hiking surcharges on higher income brackets tempting, but won't help as much as cutting rates to get more into tax net.
Karnataka Wants Goods and Services Tax Compensation Extended Beyond 2022  NDTV NewsKarnataka on Saturday sought extension of the Compensation Act beyond 2022 to bridge the revenue gap likely to arise out of a shortfall in the collection of the ...
Most millionaires support a tax on wealth above $50 million, CNBC survey says  CNBCA majority of millionaires support Sen. Elizabeth Warren's proposed tax on large wealth, according to the CNBC Millionaire survey.
Viewpoint | Here's why you should file your income tax returns in time  Moneycontrol.comDivya Baweja, Divya Agarwal and Pooja Verma. Filing of income tax returns (ITR) is around the corner and authorities have already released the necessary ...
Withdrawing Rs 10 lakh a year may attract 3-5% tax: Finance Ministry  India TodayWithdrawing a cumulative Rs 10 lakh a year can attract 3-5 per cent tax if a proposal going around in the Finance Ministry takes shape in the Budget to track high ...
Industry seeks tax cuts, bold land, labour reforms from NDA  LivemintIndustry executives on Monday sought tax cuts, lower interest rates and bold reforms in land acquisition and labour laws in a blueprint prepared to aid the Modi ...
Digital economy taxation: OECD’s roadmap and implications for India  Economic TimesBy Ajay Rotti In today's world, with technology seeping into virtually every section of the economy, the 'digital economy' is becoming intertwined with the ...
In two months, BBMP nets 45% property tax  Times of IndiaThe Bruhat Bengaluru Mahanagara Palike (BBMP) is inching towards meeting its property tax collection target, having mopped up 45% of it in just over t.
G20 countries agree to close tax loopholes for tech companies  EngadgetTech giants are already finding themselves on the hook for more taxes in parts of Europe, but there could now be a much more coordinated effort to have them ...
Bring down corporate tax to 18 pc sans exemptions: CII  Economic TimesCII wants the govt to bring down the corp tax rate to 18 per cent along with elimination of all exemptions.
Big businesses paying even less than expected under GOP tax law  POLITICOFederal tax payments by big businesses are falling much faster than anticipated in the wake of Republicans' tax cuts, providing ammunition to Democrats who ...
New York Can Tell Congress Lots About Trump’s Taxes  The New York TimesHis state returns will give the House a glimpse of past I.R.S. audits, before and after he entered the Oval Office.
Know the correct income tax return form applicable to you for FY 2018-19  Economic TimesThere are some additional points which require due consideration at the time of selecting the correct tax return form.
READ: DOJ legal opinion on Trump tax return subpoenas  CNNThe Justice Department released its legal opinion supporting the Treasury secretary's refusal to hand over President Donald Trump's tax returns.
A Former Business Partner Alleges the Trumps Evaded Taxes in Panama  The New York TimesThe accusations, in a legal filing by the owners of a luxury hotel, escalate a dispute with the president's company and are fraught with potential diplomatic and ...
Address digital infra, tax & data issues: Start-ups to govt  Business StandardRepresentatives of digital economy and start-ups on Saturday urged the government to build digital infrastructure and scale up and incentivise research ...
ITR filing: Don't make these mistakes to avoid getting tax notice  Economic TimesFind out what you should do to avoid getting a notice for small errors on income tax returns.
No taxes owed by GMR from $270-million arbitration award: Maldives  LivemintThe Maldivian government in 2017 had slapped a notice seeking $20.5 million.The arbitration ruling indemnified the Indian developer from any tax liabilities.
G20 nations set to endorse new tax framework to ensure fair play  Economic TimesNEW DELHI: India and other G20 members are set to endorse a new tax framework that could force multinational companies to abandon aggressive tax ...
Budget 2019: Godrej, Nestle united against corporate tax; say reduction needed for big cos  The Financial ExpressUnion Budget 2019 India: As FMCG industry has borne the brunt of the ongoing rural distress, Suresh Narayanan said that he hopes the budget addresses ...
Got a tax notice? Here’s what you should do  Economic TimesMistakes while filing ITR can fetch you a tax notice. Here's how you can respond to such tax notices.
Budget 2019: Tax officials likely to seek up to Rs 1.5 lakh crore reduction in collection target  India TodayOfficials from the tax department are likely to ask the finance ministry for a reduction in the tax collection target up to 6 per cent, translating to Rs 1.5 lakh crore, ...
Capital Gain on Shares? Wait Few More Days Before Filing Income Tax Returns  MoneylifeWith the Income Tax (I-T) department changing the method for calculation of capital gains tax, taxpayer are being advised not to file returns in a hurry and wait for ...
Boris Johnson’s proposed income tax cut for those earning over £50,000 is a stinker for the average Brit  The SunBORIS Johnson's first big policy announcement is a stinker. We're all for tax cuts . . . Tories should be tax cutters, above all. But what possessed Boris to think his ...
Sin tax is good for you ‑ and economy  Times of OmanYour browser does not currently recognize any of the video formats available. Click here to visit our frequently asked questions about HTML5 video.
Extend tax sops to retail investors in corporate bonds: Market players to FM  LivemintNew Delhi: Market players on Thursday urged Finance Minister Nirmala Sitharaman to extend tax incentives to retail investors in corporate bonds, and also ...
Bring down corporate tax, simplify taxation, revive infra investment: Industry to FM  Economic TimesCII President suggested that a simplified taxation regime is pivotal for improving the revenue flows and help government stick to fiscal prudence without ...
Tanzania row over wig and hair extension tax  BBC NewsA row has broken out in Tanzania over the government's decision to impose a tax on wigs and hair extensions. Many male and some female MPs applauded ...
Budget 2019: Will the new direct tax law find a mention in the FM’s speech?  The Financial ExpressBudget 2019-20: The original Direct Taxes Code (DTC) had proposed personal tax rates and income slabs which would lead to higher disposable income for ...
Tax break to land reforms: 10 things wished from Sitharamans first budget  Business StandardEverybody wants everything. The challenge for finance minister Nirmala Sitharaman's first budget is to give everybody something. Here is a look at some ...
Boris Johnson promises tax cut for 3m higher earners  The GuardianFormer foreign secretary says he will raise the 40p threshold from £50000 to £80000 if he becomes prime minister.
Rich New Yorkers are fleeing to Miami to escape high taxes. I spent 3 days there, and it was immediately clear  Business Insider IndiaKatie Warren/Business InsiderI recently spent three days in Miami touring exclusive private islands and oceanfront mansions.Wealthy New Yorkers are fleeing.
What to Expect When the IRS Alters Its Bitcoin Tax Policy  CoinDeskThe Takeaway. Coming guidance from the IRS will address longstanding questions about the tax treatment of cryptocurrency. The tax collector has identified ...
Salaried individual? Here are 7 ways you can save income tax  Times NowIf you are salaried and want to save income tax, then here are seven ways in which you can save your taxes for the financial year.
Passing the tax smell test  The Indian ExpressSubramanian's growth claims would imply a strange boost in tax to GDP ratio.
How to get tax e-refund  Economic TimesIt is important for the assessee to first link the PAN to the bank account to be able to prevalidate the bank account.
Rep. Omar filed joint tax returns before she married husband  Yahoo NewsMinnesota campaign finance officials said last week that Democratic U.S. Rep. Ilhan Omar misused campaign funds in violation of state rules. Q: What did Omar ...
Botched your tax withholding in 2018? It's about to get more complicated  CNBCFine-tuning your tax withholding is about to get a little more complicated. The Internal Revenue *Service* is expected to release a draft of its new Form W-4, the ...
NY state passes bill allowing Congress to request Trump's tax returns  CNNDemocrats in New York state passed a pair of bills Wednesday that would allow Congress to get hold of President Donald Trump's state tax returns amid an ...
Shin Bet chief met with Abbas over PA tax money held by Israel — report  The Times of IsraelNadav Argaman reportedly tried to convince Palestinian Authority head to accept funds collected by Jerusalem, amid fears of a financial collapse in the West ...
Tax settlement body orders Indiabulls Real Estate to pay Rs 300 cr on undisclosed income  MoneycontrolThe Income Tax Settlement Commission, in an order on April 30, has asked Indiabulls Real Estate to pay Rs 300 crore, as tax and interest charges, ...
Revised tax treaties usher in a new era in investment, taxation  LivemintNEW DELHI: For about a decade-and-a-half, revenue authorities examining foreign investment proposals received by the erstwhile Foreign Investment ...
ET View: Remove arbitrariness in tax administration  Economic TimesThe Centre has sent out a stern warning to tax sleuths of zero tolerance towards graft.
Ryanair's flight to Malta will take off millions in Irish tax  The TimesThe Irish exchequer is poised to lose tens of millions in tax revenues after the decision by Ryanair to shift control of aircraft for its operating bases in Italy, France ...
Bosses pocket Trump tax windfall as workers see job promises vanish  The GuardianAT&T, General Motors and Wells Fargo vowed to use tax cuts to create jobs. In fact, they did the opposite.
Goods and services tax, a game changer? Not for home decor firms at least  LivemintAfter the goods and services tax (GST) was introduced in 2017, home decor companies were in the spotlight because plywood, laminate and ceramic tile ...
U.S. Business Contributes Smallest Share of Taxes in Generation  BloombergU.S. corporations are contributing the smallest share of federal tax revenue in a generation. That's one of the findings in the Data Book for 2018, released by the ...
India’s DTAA with Canada doesn’t offer tax relief on gains from sale of property  LivemintI bought a flat in December 2017 for ₹1.2 crore in New Delhi. However, I got a job offer in 2018 and moved to Canada as a permanent resident. I have some ...
What is the tax implications if I transfer inherited mutual fund units to my sister?  Economic TimesI inherited some mutual funds from my late father. One scheme in which the initial investment was Rs 12 lakh is now worth Rs 19 lakh. I want to transfer half the ...
PF tax-exempt on completion of five years of continuous service  LivemintAs per Fourth Schedule of the Income-tax Act, the accumulated PF balance due and payable to an employee is exempt from tax, if the employee has rendered ...
Big business unlikely to get corporate tax relief, LTCG tax may be raised  Business StandardIndustry has pitched for gradual reduction in corporate tax to 25 per cent from the current 30 per cent, claiming it will bring the tax incidence at par with similar ...
Why this Kolaveri over arrest of tax evaders by GST commissioner?  Business TodaySince the GST law provides a commissioner the power to arrest a person in case he has reasons to believe that the tax evasion is likely to be more than Rs 5 ...
Can spouses split health insurance premium to claim tax benefit under section 80D?  Economic TimesWill the insurer issue two separate tax certificates to the spouses for paying the premium in parts for one health policy? Here's what tax and insurance experts ...
Here’s how much money government has made from taxing digital services in South Africa  BusinessTechCountries globally are grappling with a new digital economy, where companies sell digital goods and services across territories, but may not be paying the…
Soon you may have to pay tax on cash withdrawal of Rs 10 lakh a year  Business StandardIn order to encourage digital transaction and crack down on black money, the Narendra Modi-led NDA government may soon start taxing those who withdraw ...
STT: Brokers seek restoration of rebate under Section 88E of Income Tax Act  BusinessLineEquity brokers are seeking restoration of the rebate on securities transaction tax (STT) under Section 88E of Income Tax Act, which was withdrawn by the former ...
My Turn: Gary Sasse: Rhode Island is a 'tax hell' no more  The Providence JournalIn his 2009 State of the State Address, Gov. Donald Carcieri said he was “tired of people writing stories that Rhode Island is a tax hell.” In response, the governor ...
Put up pay, or we might not cut corporate taxes, Dutch PM tells industry - DutchNews.nl - Live  DutchNews.nlPrime minister Mark Rutte told the VVD party congress on Saturday that the government may reconsider cutting corporation tax if big companies did not start ...
Tax queries: Reduce taxable income to Rs 5 lakh, earn a rebate  Economic TimesBy Dilip Lakhani, Senior Chartered Accountant My taxable income from salary FY2019-20 (AY2020-21) is Rs 5,02,000 and my employer is deducting Rs 1,083 ...
Industry seeks tax cuts, reforms in land, labour laws  Economic TimesNEW DELHI: Top industry executives on Monday pitched for tax cuts and reforms in land acquisition and labour laws to put the country on a double-digit growth ...

The Implications of Income Tax Charge on Estate Planning

OverviewIn the Pre-Budget Report of December 2003 the Chancellor Gordon... Read More

Tax Trap #4 -- The Quagmire of Depreciation

If you are a Small Business Owner or Self-Employed Person,... Read More

State Tax Information

All states also have their own tax system. Typically there... Read More

How To Get An Instant Pay Raise

As a gentleman was leaving my class recently, he wanted... Read More

Reducing Taxes Through Dividend-Salary Mix Calculations

Should I take wages or dividends from my privately owned... Read More

Marriage or Divorce ? Check Your Social Security Number

Newlyweds and the recently divorced should make sure that names... Read More

Fraudulent Tax Shelters ? KMPG Goes Down Hard

In the largest criminal tax case ever filed, KMPG has... Read More

How to Reduce the Estate Tax Using the A-B Revocable Living Trust

In a past article I relayed the plight of the... Read More

Tax Deduction for Alimony Payments? - Yes!

Over 50% of marriages end in divorce in the United... Read More

Knock-Knock-Knock

Knock-Knock-KnockWho's there?The IRS!The next quarterly payment of estimated income tax... Read More

Know A Tax Cheat? Get Paid To Tell The IRS

According to the IRS, taxpayers underpay their taxes by some... Read More

Home Based Business Tax Deductions

Running a home based business reaps many wonderful tax deductions... Read More

What You Need To Know About Taxes If You?re Getting Married

It may not be high on the list of wedding... Read More

The Annual Gift Tax Exclusion: Getting The Edge

Whether helping the kids with a down payment on their... Read More

Income Tax Returns Your Accountant Should Not File

You've been feeling uneasy (perhaps even guilty) because you've failed... Read More

Home Business Tax Tips

If you have recently started an Internet or home business,... Read More

Tax Trap #5 -- Ignoring The IRS (and the 5 best ways to contact them!)

We all love to criticize the IRS, don't we? And... Read More

Save Money on Taxes - Let Uncle Sam Pay for Your Fun!

"Deducting Meals and Entertainment"O.K. You've been working really hard on... Read More

Euro Tax Haven Threat

Media reporting of a new EU savings tax directive has... Read More

Correspondence From The IRS ? Yikes!

It's a moment every person dreads. You pick up the... Read More

Furnishing Evidence in E-Tax Compliance

Self-assessment relies on taxpayers voluntarily meeting their tax obligations. This... Read More

Getting A Second Extension to File 2004 Taxes

Millions of people file tax return extensions every year. The... Read More

The Seven Deadly Tax Sins: Commonly Missed Deductions

It's that time again, the April 15 tax deadline is... Read More

Render Unto Caesar

Once a year Canadian taxpayers are required, by law, to... Read More

Are You An Innocent Victim of These Popular Myths?

Misconceptions, misinterpretations and just plain "untruths" are floating about income... Read More