Michigan Landlord: Help Guide to Tax Deductible Expenditures

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Michigan Landlord: Help Guide to Tax Deductible Expenditures

Posted On : Dec-04-2011 | seen (485) times | Article Word Count : 835 |

In the event you acquire rental property, it is important to always recognize possible deductions as a way to improve your profit margin whenever possible. As the owner of rental property, it is usually a smart idea to seek the advice of a tax attorney or tax consultant in order to ensure that you have a very good understanding of the things which can be potentially tax deductible. Below is a help guide among the most common things that are generally tax deductible for people who own rental property.

One of the most significant things which need to be understood while you are figuring out everything you could probably deduct could be the difference between improvements and repairs. Many people who own rental property frequently make the mistake of believing that anything they actually do to their rental property is tax deductible. This is simply not always the case; however. A repair is actually something that you do on the property to help keep it in excellent condition. As a result, it is usually tax deductible for the year in which the repair is paid for. Common kinds of repairs would include correcting a damaged toilet, painting, updating faulty light fixtures, and so on.

An improvement, however, is something that you do to the property as a way to add value to it. Because of this, it isn't often tax deductible at the time when you buy them. However, you may be in the position to get back the expense of improvements by depreciating the purchase price in the life expectancy of your property. Typical instances of developments would likely include adding a garage to the property, a new roof, etc.

Mortgage expenses are sometimes one of the leading and most prevalent tax deductions you'll be able to take once you own rental property. Of course, this can be only a choice for those who have a mortgage for the property. It needs to be mentioned that any expenses that you bear in order to acquire the mortgage aren't actually deductible at the time you have to pay for them. Typical examples would likely consist of appraisals and commissions. Once you start actually making the mortgage payments; however, you are going to normally be able to deduct the part of the payment that is paid out toward interest. It is always recommended that you keep very good records; however, you should receive a Form 1098 from your mortgage company that will detail how much you might have actually paid in interest for the year.

In some cases, it's possible you'll incur travel expenses in terms of looking after your rental property. Take into account that travel expenses are normally only deductible when incurred so that you can either maintain your rental property or to collect rent. In the event you had to travel to make improvements to the property, these expenses are not deductible immediately. Instead, however, you may be able to recover the cost as part of depreciating the improvements.

It is important to keep in mind that you usually have two options when it comes to how you can deduct travel expenses. You may choose to deduct the actual expenses or you may choose to take the standard mileage rate.

There are also many other expenses which you may be able to deduct on your taxes. These expenses may include insurance, lawn care, taxes, tax return preparation fees and any losses which result from casualties such as earthquakes, floods, thefts, hurricanes, etc.

If the rental property which you own is a condo or a cooperative, there may be some special rules which will apply. For example, with a condo you may pay assessments or dues which are intended to provide for the care of property which is commonly owned. These areas would include recreational areas, elevators, lobbies and the actual building structure itself. When renting out a condo, you can typically deduct expenses such as repairs, taxes, interest and depreciation; however, you cannot usually deduct any expenses which were spent on improvements. These costs must be depreciated over the life expectancy of the property, just as it would be when you own a single family rental property.

With a cooperative, you may be able to deduct expenses such as maintenance fees. Capital improvements are a different matter, however. You would not typically be able to deduct the cost of improvements and you also would not be able to depreciate the cost. Instead, you would need to add the cost of those improvements to a cost basis in the stock of the corporation. If this situation applies to you, be sure to speak with a tax attorney or tax consultant.

Always make sure that you are prepared to back-up any expenses which you deduct on your taxes. These expenses must be carefully documented and you will need to make sure you provide documentation, including receipts.

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<h1>Michigan Landlord: Help Guide to Tax Deductible Expenditures</h1> Author: <a href='http://www.articleseen.com/profile_John Vos.aspx'>John Vos</a> In the event you acquire rental property, it is important to always recognize possible deductions as a way to improve your profit margin whenever possible. As the owner of rental property, it is usually a smart idea to seek the advice of a tax attorney or tax consultant in order to ensure that you have a very good understanding of the things which can be potentially tax deductible. Below is a help guide among the most common things that are generally tax deductible for people who own rental property.

One of the most significant things which need to be understood while you are figuring out everything you could probably deduct could be the difference between improvements and repairs. Many people who own rental property frequently make the mistake of believing that anything they actually do to their rental property is tax deductible. This is simply not always the case; however. A repair is actually something that you do on the property to help keep it in excellent condition. As a result, it is usually tax deductible for the year in which the repair is paid for. Common kinds of repairs would include correcting a damaged toilet, painting, updating faulty light fixtures, and so on.

An improvement, however, is something that you do to the property as a way to add value to it. Because of this, it isn't often tax deductible at the time when you buy them. However, you may be in the position to get back the expense of improvements by depreciating the purchase price in the life expectancy of your property. Typical instances of developments would likely include adding a garage to the property, a new roof, etc.

Mortgage expenses are sometimes one of the leading and most prevalent tax deductions you'll be able to take once you own rental property. Of course, this can be only a choice for those who have a mortgage for the property. It needs to be mentioned that any expenses that you bear in order to acquire the mortgage aren't actually deductible at the time you have to pay for them. Typical examples would likely consist of appraisals and commissions. Once you start actually making the mortgage payments; however, you are going to normally be able to deduct the part of the payment that is paid out toward interest. It is always recommended that you keep very good records; however, you should receive a Form 1098 from your mortgage company that will detail how much you might have actually paid in interest for the year.

In some cases, it's possible you'll incur travel expenses in terms of looking after your rental property. Take into account that travel expenses are normally only deductible when incurred so that you can either maintain your rental property or to collect rent. In the event you had to travel to make improvements to the property, these expenses are not deductible immediately. Instead, however, you may be able to recover the cost as part of depreciating the improvements.

It is important to keep in mind that you usually have two options when it comes to how you can deduct travel expenses. You may choose to deduct the actual expenses or you may choose to take the standard mileage rate.

There are also many other expenses which you may be able to deduct on your taxes. These expenses may include insurance, lawn care, taxes, tax return preparation fees and any losses which result from casualties such as earthquakes, floods, thefts, hurricanes, etc.

If the rental property which you own is a condo or a cooperative, there may be some special rules which will apply. For example, with a condo you may pay assessments or dues which are intended to provide for the care of property which is commonly owned. These areas would include recreational areas, elevators, lobbies and the actual building structure itself. When renting out a condo, you can typically deduct expenses such as repairs, taxes, interest and depreciation; however, you cannot usually deduct any expenses which were spent on improvements. These costs must be depreciated over the life expectancy of the property, just as it would be when you own a single family rental property.

With a cooperative, you may be able to deduct expenses such as maintenance fees. Capital improvements are a different matter, however. You would not typically be able to deduct the cost of improvements and you also would not be able to depreciate the cost. Instead, you would need to add the cost of those improvements to a cost basis in the stock of the corporation. If this situation applies to you, be sure to speak with a tax attorney or tax consultant.

Always make sure that you are prepared to back-up any expenses which you deduct on your taxes. These expenses must be carefully documented and you will need to make sure you provide documentation, including receipts. About the Author: John Vos is an attorney in Grand Rapids, Michigan, who concentrates on matters involving lease enforcement and other real property litigation issues, primarily representing landlords and property managers on matters involving evictions, civil rights claims, fair housing claims, landlord/tenant issues and lease drafting and review. You can visit his website at http://johnvoslaw.com or check his blog for more tips at http://landlordtenantmichigan.com. Article Source: <a href='http://www.articleseen.com/Article_Michigan-Landlord-Help-Guide-to-Tax-Deductible-Expenditures_113900.aspx'> http://www.articleseen.com/Article_Michigan Landlord: Help Guide to Tax Deductible Expenditures_113900.aspx</a>

Article Source : http://www.articleseen.com/Article_Michigan Landlord: Help Guide to Tax Deductible Expenditures_113900.aspx

Author Resource :
John Vos is an attorney in Grand Rapids, Michigan, who concentrates on matters involving lease enforcement and other real property litigation issues, primarily representing landlords and property managers on matters involving evictions, civil rights claims, fair housing claims, landlord/tenant issues and lease drafting and review. You can visit his website at http://johnvoslaw.com or check his blog for more tips at http://landlordtenantmichigan.com.

Keywords : michigan landlord, landlord guide, tax deductible, deductible costs, landlord tax, rental tax, estate tax, michigan tax, low ,

Category : Finance : Real Estate

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