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BHTiger
Clemson Fan
Charleston
Member since Dec 2017
678 posts

Rental properties
What are the true tax advantages to owning rental property?

Write off:
1. Interest
2. Property tax
3. HOA fees

What else?

Looking at a property that would clear clear $225 per month (1250 cost with mortgage, escrow, HOA fees and property manager).



geauxnc0308
LSU Fan
pineywoods of ET
Member since May 2008
271 posts
 Online 

re: Rental properties
Depreciation. Expenses like fertilizer, shrubs, light bulbs, etc. It’s amazing how much stuff my properties need...


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130
baldona
Auburn Fan
Florida
Member since Feb 2016
7844 posts
 Online 

re: Rental properties
Op you know what write off means right? It’s a business expense. I say this because I hear ignorant idiots say things like ‘oh they just right it off’ like it’s free, shite isn’t free. You still pay for them, it’s just before taxes because it’s an expense.

You have depreciation and you have an expense. You can depreciate major items and the purchase price of the property minus the land value, then small things are an expense.


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72
slinger1317
Houston Astros Fan
Louisiana
Member since Sep 2005
3124 posts

re: Rental properties
Depreciation
Buying shite for "repairs and maintenance" on your "rental properties" wink wink


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100
nugget
LSU Fan
Member since Dec 2009
6652 posts

re: Rental properties
A deer lease to take your potential clients to.


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30
Fat Bastard
Boston College Fan
Member since Mar 2009
37276 posts

re: Rental properties
quote:

Write off:
1. Interest
2. Property tax
3. HOA fees



insurance
maintenance
property management
depreciation


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10
foshizzle
LSU Fan
Washington DC metro
Member since Mar 2008
40020 posts

re: Rental properties
Depreciation can be important. I'm not talking about true expenses here, that does cost real money after all. But depreciation for tax purposes assumes the property constantly loses value, which may not really be the case.

Basically you're doing an arbitrage play between what the IRS thinks is a useful life vs. the true useful life. If you're referring to residential real estate it'll take awhile (the IRS says you depreciate over 27.5 years) but the property may well wind up gaining value in reality.

Another one is collectible vehicles. Rent one out for display purposes at fairs and such, but don't drive it. You get to deduct the cost over five years even though it isn't being "used". When you sell you pay capital gains tax on the depreciated basis but that's still much less than tax on ordinary income, which is what you deducted.


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ItzMe1972
Member since Dec 2013
2052 posts

re: Rental properties
You asked for tax advantages.

Other advantages besides taxes are appreciation and mortgage pay down.


Fat Bastard
Boston College Fan
Member since Mar 2009
37276 posts

re: Rental properties
1. Equity Capture

If you bought those houses correctly, you should have captured equity in each house.

2. Market Appreciation


3. Cashflow

4. Principle Paydown



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80
Sev09
LSU Fan
Member since Feb 2011
12922 posts

re: Rental properties
If you own rentals in big metro areas or vacation spots, you can write off that travel as business expenses, as well.


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10
jimbeam
USA Fan
University of LSU
Member since Oct 2011
50248 posts
 Online 

re: Rental properties
1031 that stuff


Sev09
LSU Fan
Member since Feb 2011
12922 posts

re: Rental properties
quote:

1031 that stuff


This. Don’t actualize your capital gains.


Fat Bastard
Boston College Fan
Member since Mar 2009
37276 posts

re: Rental properties
yep roll that shite into a 1031. couldn't agree more. it also saves you the depreciation recapture you'd pay if you are a rental owner.


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20
BHTiger
Clemson Fan
Charleston
Member since Dec 2017
678 posts

re: Rental properties
Thanks will look into that.


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