For inexperienced landlords, the most stressful and surprisingly challenging period is the first few tax seasons. While it’s important to hire a Property Management Company to keep your taxes in order, if you don’t, it’s crucial to be knowledgeable about the fundamental principles to effectively make vital property tax decisions all year round.
Four Tax Tips to Ease Your Philadelphia Property Tax BurdenThe complicated and hard-to-understand verbiage of the IRS tax code makes filing taxes a tough task, especially for Philadelphia property owners who tend to have multiple properties, unorganized finances, as well as nonconventional investments and sources of revenue. Because tax rules and qualifications vary in every state, you are most likely not going to find the answers, regarding Philadelphia Property Tax that you want on the internet.
The below are a few tips to help you discharge your duties more effectively as you finalize your plans to file your property taxes for the last fiscal year. Understand the Difference Between Current and Capital Expenses
IRS tax rules clearly state what can be expenses and when its eligible for deductions. While some expenses can be deducted during the year in which they are incurred, the deduction of others is spread over some years.
To understand where to place a rental property expense, it’s essential to know whether it’s a current expense or capital expense. Current expenses are the daily costs of running a business. In this case, your rental property. It covers maintenance, utilities, advertising and insurance among others.
Capital expenses refer to long-term investments and improvements that are incurred to carry out projects that extend or improve the life of a property or home. A $15,000 kitchen remodel falls under this category. Know When It’s Possible to Write Off Mortgage Interest Of Your Rental
You will be paying a significant amount of interest each year if your rental properties have mortgages. You could potentially save thousands of dollars if you know when you are eligible to write off that mortgage interest. According to the IRS tax code, “You must use the property for at least 14 days each year, and you can only deduct interest for one primary and one secondary home. The property must have sleeping, cooking and toilet facilities, and properties that qualify include primary and secondary homes, trailers, condominiums, mobile homes, and boats.” Take Advantage of the Home Office Deduction
As talent becomes increasingly mobile and more companies and professionals are offering remote positions, it has become easier to claim a home office deduction. Provided you have an office in your home where you carry out some form of business operation, all you have to do is choose between two options which are the actual expense deduction or the simplified version. Record and Deduct Travel Expenses
A lot of rental property owners don’t bother to document their travel expenses, essentially losing the chance to save hundreds or thousands of dollars every year. While explaining this topic, Philadelphia owner of Grow Property Management Joe White says: “If you have your own automobile for local travel, you can take your deduction using either the standard mileage rate or using the actual expenses incurred, such as the cost of gasoline and maintenance on the vehicle. You can also deduct parking fees and tolls, interest on a car loan and any applicable registration or license fees and taxes.” He continues by saying that: “If you do not have your own vehicle, you can deduct your public transportation expenses for business purposes.” The most important factor here is to be diligent about recording your travel expenses. You can use several mobile apps to make tracking travel expenses easier and fun. Don’t Try to Cheat the Philadelphia Property Tax System
When filing your taxes, the temptation to cut corners can be strong due to the relatively relaxed tone of the IRS tax code regarding calculating expenses and claiming deductions. But you stand to lose more than you will gain if you try to cheat the taxman.
If you can be honest and cautious while documenting your expenses, you will enjoy your peace of mind and save yourself from incessant IRS inquiries.
