As Denver landlords start sitting down with their accountants to file taxes, now is the time to survey potential deductions for 2020 and plan ahead for 2021 taxes. Because tax law is constantly changing, many landlords are unaware of deductions that they might be eligible for. What are some of the tax breaks that many Denver landlords miss?
4 Tax Breaks Denver Landlords Need to Know
- Insurance: Virtually all of the insurance premiums that you pay for your properties are tax-deductible. These premiums include fire insurance, flood insurance, liability insurance and theft insurance. If your rental company has employees, Denver landlords can also deduct the cost of worker’s compensation insurance and healthcare.
- Mortgage Interest: Are you paying mortgages on your rental properties? If you don’t own them outright and you are paying interest on the mortgages, it could be tax deductible. Denver landlords should check with their accountants, as there is an annual cap on how much mortgage interest you can deduct for one tax year. You can also deduct any prepaid interest you paid when taking out the mortgage.
- Pass-Through Deductions: As a result of the 2018 Tax Cuts and Jobs Act, most landlords are eligible for the pass-through deduction. This deduction, depending on your total income, could allow you to deduct up to 20% of your net rental income or 2.5% of the initial cost of the rental property plus 25% of the amount you pay your workers. Your accountant can help you determine which deduction is more beneficial for you.
- Travel Expenses: While Denver landlords might own only local properties, that doesn’t mean that they don’t travel! The driving that you do for rental activities could be a deduction. Keep track of your miles throughout the year when you are driving to properties, driving to purchase supplies for repairs or other activities. If you drive your car only for rental activities, Denver landlords can also deduct expenses related to the vehicle like gas, upkeep and repairs.
All County Denver South Property Management Works with Denver Landlords Like You
All County Denver South Property Management is here to help property owners get the best return on their investment through knowledgeable and trustworthy property management services. From managing tenant relationships to lease enforcement, we look forward to working with you to see how your investment can be a long-term, stress-free asset. For a complimentary quote, call us today at (720) 664-4550.