Many expenses of a rental property are deductible on your Federal Income Tax return …the rental property is treated as a separate business with both income and expenses taken into account in calculating your Federal income tax bill. In order to treat your rental property as a business, the property must be used “regularly and exclusively” for the production of rental income.
The tax status of the property does not change even if it was for an extended period of time and one is unable to find tenants for the rental property. Of course, the interest charged on the mortgage of your rental property and the real property taxes (as well as some types of annual real property assessments levied by some tax or municipal districts) paid on your rental property are deductible. It should be noted that these interest and tax deductions are deductible on a second home even if it is a personal vacation home and not a rental property.
Also, as a personal vacation home one can rent the property for up to 14 days per year without being required to declare the rental income for Federal income tax purposes. In addition, all expenses paid by the property owner associated with the ordinary upkeep and maintenance of the rental property may be taken into account for Federal Income Tax purposes, including expenses for advertising the property for rental or lease, condominium and home owner association fees, cost of utilities, insurance, home repairs (provided they are not capital expenditures), window and shutter cleaning, parking fees, mosquito/termite/flea/rodent and other pest control, painting of the exterior and interior of the home, remodeling costs required by a prospective tenant, purchase and replacement of appliances, landscaping and lawn maintenance, security services, and other expenses attributable to the rental property.
Also, expenses of inspection of the property by the property owner or others, and fees attributable to collection of rents/lease payments, including travel expenses, are to be taken into account for Federal Income Tax purposes. Last, but not least, one must not forget to take advantage of the deduction for depreciation. See a tax professional before taking these expenses as tax deductions on your Federal income tax return. Also, see IRS Tax Publications 530 and 587 for a more detailed explanation of these tax deductible items.
Written By Leighton Q. J. Klevana Of Your Home Concierge Service, LLC.