With mid-April comes a sigh of relief. Take a deep breath, you’ve earned it. Tax Day has come and gone. Your 2015 tax filing is now in the rear-view mirror. And while it’s too late to make changes to your 2015 filing, it’s not too early to begin thinking about your 2016 return. Sounds crazy right? We literally JUST celebrated the passing of another Tax Day and we should talk about next year? Know that Simply Residential thinks about taxes year round as we carefully track and document the required tax information for our property owners. You should think about taxes as a year-round opportunity as well, because by following these three simple tips you will ensure your tax filing in April of 2017is easier than the last.
Meet with Your Tax Professional
Tax professionals are so busy leading up to Tax Day that they barely have time to see immediate family, much less discuss next year’s taxes. When the 2016 Tax Day passes and tax professionals begin to regain some semblance of their former life, schedule some time to talk with your tax professional. We at Simply Residential keep in close touch with our tax professional. It’s important to learn about the processes that will make 2017 easier, ensure no important opportunities are missed and stay updated on happenings in the tax community. In between sleeping hibernation and reuniting with family, I’m sure your tax professional would appreciate an off-season meeting over a cup of joe.
Keep Important Tax Deductions in Mind
Investment property owners are eligible for a number of tax deductions. Examples to keep in mind during the year include mortgage loan interest, rental property travel expenses, utilities, maintenance, repairs and legal/management fees. Simply Residential provides its owners with 1099’s each January, but also sends monthly statements during the year.
Examine/Revise Expense Processes
If a folder full of receipts is your current process for bookkeeping, a change is in order. There are two reasons to create a cleaner, more organized approach to tracking your spending. The first is to make preparation for Tax Day in 2017 easier. The second is that properly organized receipts will allow you to maximize your tax savings by spending on certain purchases. Reducing stress and saving money are two reasons I have a hard time arguing with.
Congrats on surviving another tax day! Simply Residential looks forward to helping our property owners in the year ahead.
Disclaimer: This article merely provides information, rather than advice and should not be viewed as a substitute for the recommendations of a tax professional.
Photo credit:Simon Cunningham; flickr.com/photos/lendingmemo
Photo credit: reynermedia; flickr.com/photos/89228431@N06/
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:
- 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!
- 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.
- Travel Expenses: If you don’t live near your investment property, we can deduct travel expenses like airfare, ground transportation, food and overnight stays.
- 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.
- 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.
- 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!
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.
- 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.
- 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.
- 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.
- 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!