Tax Time Doesn't Have to Be Taxing

Tax time is here again and you should be aware that rental income isn’t the only way to make money when you rent a property. There are many incentives and tax advantages given to rental owners that entitle you to larger profits. Some of these money saving advantages are available monthly, and some of which are available annually when filing your taxes

Were you aware that often the entire amount of your property loan payment is tax deductible? This means that both the principle and interest payments made towards your property loan may possibly be deducted from your rental income. In addition, the interest that you pay on credit card purchases for your rental property is also tax deductible. As a real estate investor, you want the rental income to match as closely as possible to the property expenses to minimize tax liability.

Some of the other common property expenses that are tax deductible include repair and maintenance costs, home office expenses, casualty or theft loss, all related travel to the property to make repairs or do regular inspections, professional fees such as an attorney or accountant, hazard insurance premiums, property depreciation beginning from year two of the rented property, and even a portion of your landlord association membership dues. The government provides us these tax exemptions to encourage greater real estate investing. Real estate investing plays a strong role in the economy, from the laborers who repair and build houses, to the mortgage broker who secures the property loan. Your investment dollars help to strengthen the housing sector in many ways and these tax deductions is our government’s way of saying “thanks”.

The major key to taking advantage of the available write-offs is good record keeping. A complete year-to-date file of your properties income and expenses will help ensure accuracy and assist your tax preparer in capturing the largest possible tax deductions for your business. So start by organizing your credit card statements, mortgage and insurance statements, and receipts. In addition, always check with a tax adviser or the IRS about other returns, deductions, or advantages that may be available for your situation specifically. The tax laws change often, so consulting with a professional who is familiar with real estate investments will keep you up to date with what’s available to you as an investor. And don’t forget that their fee is a write-off!

Also, talk to each other. Real estate investors can help one another by just sharing their own experiences. The tax rules for landlords are pretty favorable. Let us learn from our peers, and the professionals, how to only pay our fair share of taxes.

Katie Poole – Hussa is a Licensed Property Manager, Continuing Education Provider and Principal at Smart Property Management in Portland, OR. She can be reached with questions or comments at Katie@SmartPM.com

5 Questions with Multifamily Plumbing Expert, Stephen Poff

Rental Housing Journal sat down with Stephen Poff of STOP, Inc. Here’s what Stephen had to say about plumbing for the apartment and rental housing industries.

Rental Housing Journal: What are the 2 or 3 most common plumbing issues you run in to while servicing apartments?

Stephen Poff: The most common issue we encounter servicing apartment complexes would be plugged kitchen sinks. These are problematic because they can cause multiple sinks on a single stack to back-up, and possibly flood out a lower unit. Another very common issue would be main water line breaks between the water meter and the building. Most of the time a plumber is able to make a temporary repair to slow the leak down, or stop it completely. By doing this we can give the apartment manager the 24 hour notice needed to shut down the water and make a final repair.

RHJ: When it comes to plumbing, what is the biggest concern that property managers and owners should have in the Puget Sound region?

SP: In the Puget Sound area, we seldom have long or deep freezes like a lot of other parts of the country. This can be a problem, because every couple years, when it does happen, people are often unprepared. It’s always a good idea to insulate any exposed piping from the elements, even if you have never had a problem.

RHJ: Do you have any simple tips for landlords in regards to preventing plumbing issues at their properties?

SP: Removing garbage disposals from kitchens can save a lot of headache by avoiding back-ups. Disposals can be a great convenience, but are often abused and used to send large quantities of food and debris down the line that would otherwise be discarded in the trash.

RHJ: What’s the craziest situation you’ve ever come across while working at an apartment?

SP: One of the most costly and messy jobs I’ve encountered at a complex was in the Tacoma area. A large building at an apartment complex had a main sewer line break in the crawl space. This break went un-noticed until 5 footings in the crawl space had completely filled with sewage. It was to the point where sewage was overflowing at an access in a tenant’s closet. We had to remove upwards of 100,000 gallons of raw sewage using vacuum trucks just to access the crawl space to make a repair on the sewer line.

RHJ: What advice do you have for apartment managers or rental owners when choosing a plumbing company?

SP: I would recommend a company that has a fair hourly rate and truck/travel charge. Check to see if they charge any port-to-port fees, and if they charge by the hour, half hour, quarter hour. Also, stay away from flat rate companies. Flat rates are typically used to hide high hourly rates, and will often be in the favor of the company. Flat rates are nice to be able to know the cost upfront, but any hourly rate company can give you a bid with a not to exceed clause before starting the work.

About STOP: STOP Inc was formed with Multi-Family and rental owners and managers in mind. They specialize in reliable service at any time or day. STOP’s company goal is to help maintain clients properties in the most efficient manner, based both on costs and longevity. STOP Inc was formed in 2009, and has grown from a one man shop to a 15 employee company covering from Centralia to Bellingham. Everyone on our staff is very familiar and experienced with the types of service required by Multi-Family housing. Stop, Inc can be reached at 877-380-7904