Tax Day Cometh: 6 Important Tax Deductions for Landlords

Photo credit: reynermedia;

Photo credit: reynermedia;

As Minnesotans, we can count on a few certainties in life. We will complain about winter but most of us will continue to live here year after year.  The purple and gold will annually frustrate fans by not winning the big one, but we will keep cheering “Skol Vikes.” And don’t forget road construction season, which is referred to as ‘summer’ in other states. These are but a few of life’s certainties in Minnesota.

No matter where you live, death and taxes are usually regarded as the two universal guarantees in life. Neither are pleasant topics but both are inevitable. Actually, you can get by without paying taxes but you’re strongly advised against that approach. The government tends to frown on those avoiding taxes and the financial penalties are harsh.

Fortunately, as property owners who rent out their property, tax time can be easier to stomach. There are plenty of tax deductions available to landlords within the U.S. tax code. As always, consult with a tax professional to learn more. Here are a few of the most popular deductions a landlord should keep in mind:

  1. Loan interest if there is a mortgage on your property: This is the big one. If you have a loan on your investment property, the interest is tax deductible. That can be a large amount!
  2. Legal, Professional and Management Fees: With a rental property comes the need for help with taxes, accounting, legal and property management support. These professional fees are tax deductible.
  3. Travel Expenses: If you don’t live near your investment property, we can deduct travel expenses like airfare, ground transportation, food and overnight stays.
  4. Utilities: If you pay for any utilities at your investment property, those costs are deductible. They include gas, electricity, water and city services like garbage and recycling.
  5. Repairs: Repairs refer to fixing items that no longer work properly and include fixtures, plumbing, air conditioning and even the fees for hiring contractors and renting tools for said repairs.
  6. Maintenance: There are plenty of maintenance expenses that are different than ‘repairs’. They include lawn care, pest control, tune-ups on lawn care equipment and even light bulbs and smoke detector batteries!

While Tax Day typically falls on April 15, this year we have a few extra days. That’s due to Emancipation Day being recognized on Friday, April 15. That pushes Tax Day to the following Monday. So you’ve got a few extra days to prepare your taxes. Use them wisely!

Women’s History Month

In the United States, the month of March is Women’s History Month. While the focus of the month in 2016 is honoring women in public service and government, let’s take a look at the impact of women in the real estate industry. As early as the 1880s, women were transitioning from early real estate roles such as bookkeeping to becoming full-fledged agents and brokers.

Today women make up a majority of the residential real estate profession and there are a number of organizations specifically for women in the industry. Women in Real Estate (WIRE), Women’s Council of Realtors (WCR) and Commercial Real Estate Women (CREW) are active nationally and have Twin Cities chapters.

In a 2015 interview with Real Estate Agent Magazine, Tasha Soundara, president of the Twin Cities Chapter of the Women’s Council of Realtors, discussed the organization’s role.

“…Empower women to be strong business leaders. Our organization showcases the strength of women in the industry (and) through our work we promote the image of the successful female entrepreneur within the community. “

Simply Residential Property Management is proud to recognize and honor women during this important month, especially all those within the real estate industry.

4 Things to Consider When Choosing a Property Management Company


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You’ve crunched numbers. You’ve considered all the possible outcomes and challenges. And now you’re comfortable moving forward hiring a property management company to manage your rental property. Congratulations. While you’ve made some substantial progress, your journey to rent your property still has some road left to travel.

Entrusting your investment property to a property management company is easy, though admittedly emotional. But deciding which property management company to hire is the real important decision. These should be the most important factors you consider when comparing property management companies:


One of the more important issues you’re interested in is the cost. There are fees for management, vacancy, set-up, maintenance, eviction, advertising, unpaid invoices and more. Renting a property is meant to bring you additional income, right? The less a property management company charges, the better.  But while price is obviously a major factor, don’t get too caught up in only the total cost of these fees. Consider how that cost is spread out over time. Some property management companies load up a management contract with upfront costs. Ask yourself, if they are paid up front, what’s their incentive to perform at a high level throughout the duration the agreement? Other property management companies forgo those heavy upfront costs in favor of building long-term relationships with you and proving themselves over time.

Personal Attention

You’ve heard the saying “Bigger isn’t always better.” That applies when considering property management companies. If your research shows that all factors are equal between two property management companies other than sheer size, you may receive more personalized attention from that small partner. You’ll be viewed less as a number and more as a true partner. In the end, we all want a property management company we can trust that provides timely and courteous communication throughout the relationship.


The property management company is responsible for maintaining  and hopefully increasing the value of your investment property during their time as your partner. That can be done by properly addressing existing issues and being proactive with preventative maintenance.  Here are a few questions to ask property management companies about their maintenance approach:

How are tenant maintenance requests tracked and acted upon?
What’s the process for after hours maintenance?
What can you tell me about your maintenance technicians?
Is maintenance coverage 24/7 and 365 days a year?
What’s the process for entering my property?

The Tenant

You already know how important a property management company is. The tenant chosen to live in your property is also important. The services of the property management partner should include finding, screening and securing tenants. You’ll want to know where your rental listing will be advertised, how screenings will be conducted on applicants and what steps will be taken to secure tenants. It’s important to feel comfortable with the property management company’s approach to tenants and their capability to find a great fit.

Learn how Simply Residential Property Management is simply different than other property management companies. Request a free rental analysis today!

Be Proactive to Minimize Your Liability as a Landlord


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This post was written by Jeff O’Brien for Simply Residential Property Management Magazine.

Last month, I discussed the pertinent legal standards under Minnesota law for when a landlord can be held liable for injuries to tenants and/or their guests.  This month, I’m going to discuss some basic steps that landlords can take to minimize their exposure to such claims.

The Difference Between Liability and Being Sued

When it comes to civil lawsuits, Minnesota – like most states in the U.S. – is known as a “notice pleading” state.  That means that a plaintiff does not have to prove his/her entire case in the complaint.  If the plaintiff has a good faith basis for a claim, their attorney is permitted under the lawyer ethics rules to commence a lawsuit, and the details of the case are then explored later on during discovery, and then come the motions and, well you get the idea.

What does this mean? It means that, even though ultimately you as a landlord may likely prevail in a lawsuit brought by a tenant, you still have to defend the lawsuit.  Hence, taking some additional steps to prevent exposure for a claim brought by a tenant for injuries is a wise course of action.  Here are a few simple steps you should undertake immediately to audit your level of exposure to a tenant claim:

Use of Liability Limiting Entities

Use of a liability limiting entity such as a limited liability company can insulate a property owner’s personal assets from liability arising from tenant claims.  For best results, it is recommended to own each property in a separate limited liability company (or LLC for short).  In this manner, in the result of a tenant lawsuit related to one property, only the assets of the LLC which owns that property are at risk; in other words, the potential claim should not affect your other properties owned within separate LLCs.

Note that I said that the potential claim should not affect your other properties; in order to make certain that other entities and properties are not affected, you must be certain to respect the corporate formalities of each LLC.  Separate bank accounts should be opened for each separate LLC and the income and expenses relative to each property should be run through those bank accounts.  Do not commingle funds between properties and do not commingle funds from your rental properties with personal funds.  Otherwise you leave yourself open to “veil piercing” claims in the event that a tenant prevails in a lawsuit but finds no assets available to satisfy their judgment from the subject LLC.

Do You Have Adequate Insurance Coverage?

In order to best minimize the risk of liability for injuries to their tenants and/or guests, landlords should make sure that they have adequate insurance coverage – including provision of and payment for legal counsel in the event of a claim – for each of their properties.  If you choose to utilize separate entities for each rental property, make sure that each entity is properly named as the insured under the policy.

Review Your Leases

A final preventive step to take would be to review your leases to make sure that they do not create any express liability occasioned by a tenant injury.

With respect to both the lease review and entity formation matters, use of a knowledgeable attorney to audit your entity documents and lease forms would be a cost effective investment given the alternative of expensive litigation.

Jeffrey C. O’Brien is an attorney with the Minneapolis based law firm of Lommen Abdo, P.A. voice of the “Legal Minute on Minnesota Home Talk, heard Saturdays on 1500 ESPN, and a Minnesota State Bar Association Board Certified Real Property Specialist. He can be reached at (612) 336-9317 or via email at

Add These 6 Spring Cleaning Projects to Your Calendar


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In Minnesota, the month of March is unpredictable. Some years you’re shoveling a foot of fresh, new snow and cursing under your breath. Some years you’re slicing it off the tee on the back nine of your local golf course and cursing under your breath. Some years you’re doing both. No matter what Mother Nature dishes out in March, we know that spring is just around the corner. It’s time to get the house prepared with a handful of outdoor and indoor home maintenance projects. It’s important these projects be completed, as they’ll help save you money down the road. When the warmer weather finally arrives, you’ll fully enjoy it knowing your home is prepared.

Outdoor Projects

  1. Air Conditioner

Have a qualified heating and cooling expert inspect the home’s air conditioning. It may seem like an unneeded expense, but annual check-ups ensure the entire system runs smoothly. There’s no reason for the air conditioner to work harder than it needs to. And you’ll appreciate that the air conditioning is fully functioning when you hit the hot days of summer.

  1. Faucets

Hopefully your winter prep prevented any faucet freeze damage issues but a thorough inspection of outdoor faucets doesn’t hurt. Water should be flowing well from the faucets. And while you’re at it, you might as well find the hose in the shed, inspect it for rotting and hook it up for yard care that’s coming soon.

  1. Gutters

Get out the ladder and check out those gutters. With April showers around the corner, ensure the gutters are clear and flowing properly. The main job of gutters is to drain water away from the home, not into your basement or foundation. Help the gutters do their job. It’s all they ask.

Indoor Projects

  1. Hit the Laundry Room

It’s a good time to take a look at the washer and dryer. The washer hoses should be inspected for leaks. Cracks in the hose are a warning sign. The dryer vent should be cleaned of all debris not caught by the lint trap. This maintenance will help your dryer run less and you’ll be removing a serious fire hazard.

  1. Repair and Clean Window Screens

In Minnesota, we relish opening our windows to let in a cool breeze. Spring is the time to clean screens by giving them a good soapy scrub. It’s not the most fun you’ll have but you’ll appreciate the clean air flowing into your home when summer rolls around. For damaged screens, you can patch holes or replace entire screens.

  1. Vacuum Refrigerator Coils

The more dust that covers the coils behind the refrigerator, the harder that appliance needs to work to keep cool. This is the easiest spring job you’ll have. Simply run a vacuum hose through the area to keep it clean. It will save you energy costs and prolong the life of your refrigerator.

Being a homeowner provides many advantages, but it also brings with it the responsibility of maintenance. Preventative maintenance is less expensive than dealing with a problem after it has occurred. And it will give you peace of mind. Take these six maintenance steps annually each spring and your home will thank you. The health of your home depends on it.

4 Reasons to Rent Out Your Home


On a daily basis, property owners throughout the Twin Cities mull over the idea of renting out their home. How would I do it? Is this the right time? What if something goes wrong? Just the thought of moving out of your prized possession and opening it up to total strangers can be scary. But know that property owners make the decision to rent their property every day. And it doesn’t need to be intimidating. Before bogging yourself down in the details of renting your home, let’s first look at a list of key reasons why someone would consider renting out their property.

  1. You want to expand your wallet

Who couldn’t use an additional income source? Renting out your property is a viable money-making venture if you’re able to bring in enough rental income to cover the mortgage, expenses and allow some income for yourself. One of the most popular questions property owners ask is what their property will rent for. There are many factors that influence the amount. Simply Residential Property Management conducts a thorough market analysis of the property, which reviews the market, the competition in the neighborhood and the interior and exterior condition of the property. Our goal is to produce a competitive price while also providing you with the highest return. With this market analysis in hand, we allow the owner to decide on the final price.

  1. You are no longer able to stay in your current home

There are a number of reasons a property owner may choose to leave a home. Perhaps it’s due to a job transfer to another market. A budding relationship may mean leaving an existing home behind. Sometimes an owner will run into cash flow problems and no longer be able to cover mortgage and home expenses. No matter the reason, renting out your home can be a solid temporary solution. And whereas selling is permanent, renting gives you a fallback option to take up residence again some day.

  1. The market just doesn’t want to let you go

As property owners, we’re all at the mercy of the market to some degree. We may be ready to sell our home but if the market isn’t going to give us the selling price we want, we need to wait. But this temporary phase need not be painful.  Take some time to allow the market to adjust by renting your home. While Twin Cities’ property values are still recovering from years past, signs are clearly pointing to continued growth in the market during 2016 and going forward.

  1. The tax man cometh…and giveth

Last but not least…taxes. No one likes taxes but how about tax deductions? Renting a property means deducting many costs. The cost of independent contractors like roofers, painters and other maintenance workers can be deducted from costs of a rental home. Rental property expenses like utilities and travel costs when doing business can be deducted. Even landlord insurance is a deductible expense. The word ‘taxes’ never sounded so sweet.

Did any of these reasons resonate with you? If so, it’s time to take the next step and research what it takes to rent out your home. The Simply Residential Property Management website has an excellent FAQ section that answers many questions that property owners have. In addition, we have a free rental property analysis on our website that allows us to provide a custom quote. Our staff would be happy to sit down and discuss your goals and concerns.  Happy Renting!

In Focus: How Can Other Property Management Companies Benefit From a Partnership with Simply Residential?

post-itWhen you own or manage a property management company, it’s easy to see other companies as nothing more than the competition. At Simply Residential, we believe that relationships with other property management companies can be positive and mutually beneficial. It can allow for sharing of efficiencies and other best practices, which ultimately benefits the end customer.

The rental industry is constantly in flux, and many companies are finding that there are different opportunities in the buy/sell arena. If that’s the case, it’s valuable and strategic to have connections in the property management community with whom you can discuss mergers or acquisitions.

Real estate in Minneapolis is increasing in value, and there’s truly a small community of professionals that work within that realm. Many organizations partner with each other so they have a greater reach within the state, for example, one company focuses on Minneapolis real estate while others may focus on Mankato or Duluth. Having partners in those areas helps expand your portfolio of properties, potential to earn, and ability to best service your clients.

The considerable amount of time we’ve spent working in property management has taught us that having a portfolio of under 200 properties makes little to no financial sense. Many companies of that size end up losing money, especially when it comes to single-family residential properties. In that instance, we always advise our friends and partners to consider a merger, they get to keep their clients and we both pool our resources to enhance our businesses!

If you’re thinking about venturing into buy/sell, or if you have single family residential properties that you no longer wish to manage, give us a call! We’re here to help.

If you want to learn more about partnering with Simply Residential, visit or contact Ron Huckabee at 952-831-5300 or via email at!

How Do You Choose a Renter?


One of the main responsibilities of property management firms such as Simply Residential Property Management is the careful screening of prospective tenants. Through a thorough and comprehensive background check into a tenant’s credit history and available public records, property management companies are better able to select responsible tenants who will uphold the conditions that are stated in the lease. The performance of background checks greatly reduces the instances of non-payment of rent, damage to property and evictions of bad tenants.

A main component of the background checks performed by the staff of Simply Residential Property Management is a comprehensive screening of a prospective tenant’s criminal history and public record information. Those tenants who have histories of property damage, theft, violence and any drug or sexual-related offenses will not be allowed to rent a property managed by Simply Residential Property Management. These offenses can greatly jeopardize and safety and welfare of both staff and other tenants.

Another important part of the selection criteria employed by Simply Residential Property Management is the verification of income. Having a consistent and stable form of verifiable income is a strong indicator that the monthly rent will be paid on time. Prospective tenants are able to send the necessary tax forms and other important documents which contain their income information to a representative of Simply Residential Property Management by telephone or by fax. In order to qualify, renters must make three times as much income as the cost to rent the property.

Looking at a potential tenant’s work history goes hand in hand with the verification of income. A stable work history shows not only that a prospective tenant can handle the responsibilities that come with employment as well as shows a verifiable and steady source of income. Additionally, if a prospective tenant is consistently employed in an occupation that is a higher-salary position, that could be a factor that can be weighed a little heavier than other factors.

A renter’s credit history is also thoroughly reviewed by staff at Simply Residential Property Management. Credit reports can indicate the overall financial shape a prospective tenant is in at the time of application. Credit reports are histories which show what financial obligations tenants have and how those obligations are being paid. Additionally, credit reports can have property management staff an indication of how prospective tenants have honored past debts. If a tenant has a past history of bankruptcy, collections activity or has unpaid rent from previous residences, the chances of renting decrease. However, it is important to note that if potential clients are upfront about their past credit mistakes, property management firms may be more likely to try and work with those tenants.

In the unfortunate event that a prospective tenant’s application has been denied, Simply Residential Property Management will be notified by staff regarding that decision by first class mail. Staff at Simply Residential Property Management may also deny applications from tenants if they feel those prospective tenants may jeopardize the stability of both the property and residents. While extensive background checks are not able to catch all bad tenants, they greatly reduce those instances so residents can enjoy both safety and peace of mind.

Are Landlords Liable for Tenant and Guest Injuries?


This post was written by Jeff O’Brien for Simply Residential Property Management Magazine.

Can you be held liable when a tenant or guest is injured on your property? More importantly, what steps can landlords take to minimize liability for these injuries.

Common Law Duty – General Rule; Exceptions
For a common law negligence claim, one must prove (1) the existence of a duty of care, (2) breach of that duty, (3) proximate causation, and (4) damages. White v. Many Rivers West Limited Partnership, 797 N.W.2d 739, 743 (Minn. Ct. App. 2011). When it comes to the liability of landlords for tenant injuries, however, Minnesota courts have long held that landlords generally owe no duty of care to their tenants and are not liable for damages caused by defective conditions on the leased premises. White, 797 N.W.2d at 744 (Minn. Ct. App. 2011), citing Oakland v. Stenlund, 420 N.W. 2d 248, 250 (Minn. Ct. App. 1988).

Several exceptions to the general rule exist. A duty of care may exist if the landlord: (1) has willingly undertaken to repair the premises and done so negligently; (2) retains control of certain areas of the premises; or (3) is aware of a hidden hazard on the premises by the tenant is not. White, 797 N.W.2d at 744, citing Gradjelick v. Hance, 646 N.W.2d 225, 231 (Minn. 2002).

Negligent Repair Exception
If a landlord assumes the duty to correct a defect on part of the property when not required by the lease to do so, “the landlord must bear the burden of failure to make a good job of it.” White, 797 N.W.2d at 744, quoting Canada by Landy v. McCarthy, 567 N.W.2d 496, 504 (Minn. 1997). The duty of reasonable care to make a good job of repairs, however, requires only that “the necessary repairs [be performed] in a reasonable way.” Id. The landlord’s duty is not to make improvements to the safety of the thing repaired exceeding the safety standards otherwise imposed by law.

Retention of Control Exception
A second exception to the general rule occurs if the landlord retains possession of an apartment’s common areas, like stairs, halls, elevators or yard space. White, 797 N.W.2d at 745, citing Rosmo v. Amherst Holding Co., 50 N.W.2d 698, 701 (1951). Note that a landlord performing routine maintenance on windows in a unit or addressing a tenant’s complaints related to the windows does not fall under this exception. White at 745.

Hidden Hazard Exception
If a property contains hidden dangers that the landlord knows about and the tenant does not, the landlord must warn tenants about that danger, but the landlord has no corresponding duty to warn a tenant’s guests. White, 797 N.W.2d at 745, citing Oakland, 420 N.W.2d at 251. And no warning is required even for the tenant when the tenant knows of the dangerous condition or the condition is so open and obvious that the tenant can be expected or have discovered it on her own. White, 797 N.W.2d at 745, citing Johnson v. O’Brien, 105 N.W.2d 244, 247 (1960).

Contractual Duty of Care – General Rule
A landlord may contractually create a duty to maintain the leased premises. White, 797 N.W.2d at 746, citing Dyrdal v. Golden Nuggets, Inc., 672 N.W.2d 578, 587 (Minn. Ct. App. 2004), affirmed, 689 N.W.2d 779 (Minn. 2004). When a lease contains no stipulation on the subject of maintenance, generally “there is no implied covenant on the part of the landlord…that the premises are or will prove to be suitable for the tenant’s use.” White, 797 N.W.2d at 746, quoting Krueger v. Farrant, 13 N.W. 158, 159 (1882). But if a landlord expressly agrees to maintain a part of the lessee’s premises, he then creates a duty to exercise reasonable care. White, 797 N.W.2d at 746, quoting Drager, 495 N.W.2d at 885. However, a landlord’s promise to repair parts of premises for safety purposes is not an express agreement to repair to a certain standard. White, 797 N.W.2d at 746, citing Normandin v. Freidson, 233 N.W. 14, 15 (1930).

Jeffrey C. O’Brien is an attorney with the Minneapolis based law firm of Lommen Abdo, P.A. and a MSBA Board Certified Real Property Specialist. He can be reached at (612) 336-9317 or via email at

Things to Consider Before Renovating Your Rental Property


When it comes to the renovation of your rental property, there are a number of things that you have to consider. First of all, statistics show that the majority of the money that is spent on renovations will never be recouped. This means that you should consider carefully if renovations for your property are really necessary.

The ROI (Return on Investment)
First things first, consider whether or not the renovations will up the value of your investment, or attract more potential renters. Not every single renter will be looking for a kitchen that has been recently renovated. However, a kitchen that is outdated or not decorated well can definitely be a turn off. Old or ugly cabinets or cheap and chipped counters can sent potential tenants running for the hills. Keep in mind, you can give the kitchen a facelift without having to completely redo the entire space. Consider some smaller repairs that need to be made, which will increase the ROI you receive.

The Hidden Costs Associated with a Renovation
When it comes to remodeling your rental property, there will always be additional consists that you did not anticipate – even smaller jobs. After you calculate all of the potential expenses of the project, you should always add an extra 10 to 20 percent depending on the actual estimate that you are given. This will help you get a much better idea of the costs that you will be having to pay.

You should also not forget to include the costs of any additional tools that you might have to purchase, the gas that will be necessary for picking up materials and any extra things that you may need.

Finding the Right Professional for the Job
A key to the success of your remodeling project will be to find the right contractor. If you are unsure of who to use, this may result in you using a contractor that is not as experienced as you may be able to find. This is when the contacts that a property manager has can be extremely beneficial. They will likely have on-going relationships will all types of contractors who will be able to work on your property for a fair cost and the job will be completed in a timely manner.

It is important to avoid simply choosing the first contractor that you come across. This will likely result in less than ideal results. If you have a rental property in Minnesota that you are considering having remodeled, then you definitely need to contact Simply Residential Property Management. They will ensure that your project is successful and affordable.

Questions about renovating your rental property? Contact us today at!