How Landlords Can Save on Taxes and Why You Need Landlord Insurance
Owning rental property in the US is a great way to build wealth, but it’s important to know how to take advantage of tax breaks and protect your investment with landlord insurance. Here's an easy-to-understand guide to help you maximize your profits and minimize risks.
Tax Benefits Every Landlord Should Know
- Deductible Expenses You can deduct many costs related to running your rental property, including:
- Mortgage interest (the interest part of your loan payments)
- Property taxes
- Maintenance and repairs (like fixing leaks or painting)
- Utilities and property management fees
- Insurance premiums (including landlord insurance)
- Legal or professional services (like accounting fees)
- Depreciation Over time, your property wears down, and the IRS lets you deduct a part of its value every year for 27.5 years. This reduces your taxable income and saves you money.
- 20% Business Income Deduction If you run your rental property as a business, you might qualify for a 20% tax break on your rental profits, thanks to recent tax law changes.
- Repairs and Maintenance Everyday repairs (like patching holes or fixing broken appliances) can be deducted from your taxes the year they happen.
- Travel Costs If you travel to check on your property or handle maintenance, those travel expenses—like gas, airfare, and lodging—can be deducted too.
- Home Office Deduction If you use part of your home to manage your rental properties, you could qualify for a home office tax deduction. This can cover part of your rent or utilities.
- Losses If your rental expenses are more than what you earn, you might be able to deduct the loss from your overall taxes. There are some rules to this, so check with a tax expert.
Why Landlord Insurance is a Must-Have
Saving on taxes is great, but protecting your property is just as important. That’s where landlord insurance comes in. Here’s why you shouldn’t go without it:
- Protects Your Property If your rental property is damaged by fire, storms, or vandalism, landlord insurance helps cover the repair costs.
- Covers Legal and Medical Costs If someone gets hurt on your property and sues you, landlord insurance can help cover legal fees and medical bills.
- Covers Lost Rental Income If your property is damaged and you can't rent it out, landlord insurance can help cover the lost rent while repairs are being made.
- Covers Tenant Damage While normal wear and tear isn’t covered, some policies protect against damage caused by tenants.
- Extra Protection Options You can add extra coverage for things like floods or broken appliances.
Final Thoughts
Knowing about tax deductions and having landlord insurance are two of the best ways to keep your rental property profitable and protected. Tax breaks can save you thousands, and the right insurance can cover you when unexpected problems come up.
Pro Tip: Always talk to a tax professional and insurance expert to make sure you're getting the most out of your deductions and insurance coverage.