12Law Arrow 12Law Arrow  Easy Questions  
12Law Arrow 12Law Arrow Instant Legal Documents
 
 
FINANCIAL & MARITAL

Cohabitation Agreement coming soon!
Separation Agreement coming soon!
No-Fault Divorce coming soon!
Bankruptcy coming soon!
 
 

Tax Deductions for Landlords in Santa Rosa, CA

Tax Deductions for Landlords in Santa Rosa, CA


I would uphold the law if for no other reason but to protect myself.
 
- Thomas More


Owning a rental property can be a rewarding venture because of its many tax deduction features. The US government lets land owners and landlords deduct certain expenses on their taxes that can offset their assessable income.

Landlords are likely to have tax due to depreciation, which is a non-cash expense. Residential buildings are depreciated over 27.5 years and commercial buildings over 39 years. However, your ability to actually deduct rental tax losses may or may not be postponed by the passive activity loss (PAL) rules.

The default treatment of tax losses from owning rental real estate is to consider them passive activity losses (PALs). That's unfavorable because you can only deduct PALs to the extent you have passive income from other sources (such as income from other rental properties or gains from selling rental properties). Excess PALs are suspended until you have enough passive income to deduct them. You can also deduct suspended PALs when you sell the properties that generated the PALs.

There are two taxpayer-friendly exceptions to the PAL rules: 1) for active investors - owning a 10% or greater stake and at least making management decisions like approving tenants, signing leases, authorizing repairs, and so forth; or 2) for real estate professionals - spending over 750 hours during the year in real estate activities including non-rental activities such as acting as a realtor or real estate broker) in which you materially participate. In addition, the hours you spend on real estate activities must exceed 50% of all the time you spend working on personal service activities.


Common tax Deductions for Landlords

Expenses can be deducted if they belong to ordinary and necessary in the line of business:

• Ordinary Expenses. This refers to "common and accepted" within the industry.

• Necessary Expenses. This refers to "helpful and appropriate" expenses for the business.

Points of Caution

• If you want to claim any deductions to your taxes, you must keep a detail and accurate records of the expenses.

• Even if this is common tax deductions, this is not applicable to all landlords, rental property owner or property investor.

Common Tax Deductions

• Depreciation. These expenses refer to the things purchased for the business which is still useful beyond the current tax year. It has to meet three rules :

o It should last more than a year

o It should be of value to the business

o Wear out or lose its value over time

Examples of depreciated assets:

o Purchase price of the property

o Improvements done in the property

o Added fences or shrubbery

o Appliances or furniture

o Car for business use


• Passive Activity Losses. This limits your ability to claim losses that have incurred in passive activity from other types of income. Having a rental property can be considered as a passive activity, unless you are an active investor or a real estate professional, as described above.

• Repairs. These are work necessary to keep your property in good working condition. Painting can be part of the repair. These upgrades do not add value to the property. Not all maintenance done in the property is considered repairs. Be aware that IRS makes distinction between improvement and repair. Improvements can add value to the property and cannot be deducted in full in the year they incurred. Improvements in property will be capitalized and depreciated over their useful life.

• Travel Expenses. This refers to long distance and certain local travel expenses as long as they are business related. It does not include the daily traveling from your home to your place of business.You can take deduction when you have a car using standard mileage rate or using the actual expenses incurred such as depreciation on the vehicle, gasoline and vehicle maintenance and other vehicle related expenses. Public transportation expenses use when conducting business can also be deducted when you do not have a car.


• Interest. You can deduct the interest on paid business related expenses.

• Home Office. If you use part of your home as an office you can deduct it as part of a home office deduction. The amount depends upon the percentage of the home office takes up from your home.

• Entertainment Costs. These are cost incurred during business dealings.

• Legal and Professional Fees. Hiring a professional to do work for the business allows you to deduct the fees paid them.

• Employee Compensation.You can deduct the wages to pay employees involved in running the business as business expenses.

• Taxes.Property tax, real estate taxes and sales taxes on business related items that are not depreciable for the year can be deducted. You can also deduct fees for tax advice and the preparation of tax forms related to the real estate property.

• Insurance. Premiums paid for commercial insurance, liability coverage, health insurance for employees, etc. can all be deducted.

• Casualty Losses. Damage to property that happen during a catastrophic event like fire can be part of the deduction.

Other Common Tax Deductions Include:

• Advertising costs

• Rent paid to others

• Telephone calls related to your rental property activities

• You can credit or deduct expenses paid to make your property accessible to individuals with disabilities or the elderly

 
Personalize & Print a Free CA Last Will Create This Document
Page 1
Page 2
Page 3
Page 4
Page 5
Page 6
Page 7
Page 8
Page 9
Page 10
 
Personalize & Print a Free CA Living Will Create This Document
Page 1
Page 2
Page 3
Page 4
Page 5
Page 6
Page 7
Page 8
Related Legal Services near Santa Rosa, CA
Jensen Chas Atty
1622 4th St
Santa Rosa, CA 95404
(707) 527-9911
General Practice Attorneys, Attorneys
Charles D. Stark, Attorney and Counselor at Law
3510 Unocal Pl
Santa Rosa, CA 95403
(707) 527-9900
Attorneys, Accident & Property Damage Attorneys, Corporation & Partnership Law Attorneys, Personal I
Stark Charles D
3510 Unocal Pl
Santa Rosa, CA 95403
(707) 527-9900
Attorneys,  Accident & Property Damage Attorneys,  Corporation & Partnership Law Attorneys,  Persona
Marie Maiolo Muchow
348 College Ave
Santa Rosa, CA 95401
(707) 566-9767
General Practice Attorneys, Attorneys
Coastal Reporting Services
131 Stony Cir
Santa Rosa, CA 95401
(707) 573-9766
Court & Convention Reporters,  Attorneys Support & Service Bureaus,  Legal Document Assistance,  Ste
Dann Emery & Karen
1120 Carr Ave
Santa Rosa, CA 95404
(707) 527-9711
Family Law Attorneys
Weinberger Mark
613 4th St Suite 201
Santa Rosa, CA 95404
(707) 546-9700
Attorneys, Employee Benefits & Worker Compensation Attorneys
Zatman Murray & Associates
818 College Ave
Santa Rosa, CA 95404
(707) 542-9700
Attorneys,  Probate Law Attorneys,  Estate Planning, Probate, & Living Trusts,  Elder Law Attorney
Norton & Ingersoll PC
200 4th St
Santa Rosa, CA 95401
(707) 293-9699
Estate Planning Attorneys
Gillmeister & Gorak
726 College Ave
Santa Rosa, CA 95404
(707) 526-9636
Arbitration Services,  Attorneys,  Mediation Services,  General Practice Attorneys,  Legal Service P
Legal Ese
50 Santa Rosa Ave
Santa Rosa, CA 95404
(707) 569-9604
Paralegals
Brothers Margaret
1400 N Dutton Ave
Santa Rosa, CA 95401
(707) 623-9561
Criminal Law Attorneys, Attorneys, Legal Service Plans
Arbitration & Mediation Center
111 Santa Rosa Ave
Santa Rosa, CA 95404
(707) 525-9409
Arbitration Services,  Mediation Services,  Marriage, Family, Child & Individual Counselors,  Lega
Murray Robert A
111 Santa Rosa Ave
Santa Rosa, CA 95404
(707) 525-9409
Arbitration Services,  Attorneys,  Mediation Services,  Legal Service Plans
Tavis Linda C
4010 Montecito Ave
Santa Rosa, CA 95404
(707) 578-9386
Attorneys, General Practice Attorneys
McCausland Zilda S
141 Stony Cir # 205
Santa Rosa, CA 95401
(707) 578-9375
Family Law Attorneys
Steve Weiss
1955 Cleveland Ave Ste 202
Santa Rosa, CA 95401
(707) 578-9254
Attorneys, Criminal Law Attorneys, DUI & DWI Attorneys, Legal Service Plans
Deen James R
1400 N Dutton Ave
Santa Rosa, CA 95401
(707) 536-9215
Attorneys, Legal Service Plans
McCann & Bartels
50 Old Courthouse Sq, Ste 500
Santa Rosa, CA 95404
(707) 874-9204
Legal Service Plans, General Practice Attorneys, Patent, Trademark & Copyright Law Attorneys, Attorn
Faria, Maureen
930 Mendocino Ave
Santa Rosa, CA 95401
(707) 526-9100
Attorneys, Family Law Attorneys
Law & Mediation Offices Of Maureen A Faria
930 Mendocino Ave-Suite 100
Santa Rosa, CA 95401
(707) 526-9100
Mediation Services, Attorneys
Alger Andrew K
2841 Cleveland Ave Ste 6
Santa Rosa, CA 95403
(707) 875-8943
Attorneys, Legal Service Plans
Silver Paul S
815 5th St Ste 200
Santa Rosa, CA 95404
(707) 527-8811
Attorneys, Legal Service Plans
Bankruptcy Answers
2 E St
Santa Rosa, CA 95404
(707) 525-8810
Bankruptcy Law Attorneys,  Attorneys,  Personal Injury Law Attorneys,  Bankruptcy Services
12Law.com   |  NASHVILLE, TN USA   |  CONTACT US