Today, we are continuing our discussion about why owning rental property is an IDEAL way to pay for a college education and fund your retirement plan. As you know, we’re using IDEAL as an acronym to explain, and today, we’re talking about the “D” in IDEAL.
D is for Depreciation and Deductions
Understanding the tax benefits of your investment can be complicated, so it’s important that you talk to your CPA or tax professional. Owning rental property makes good tax sense. The IRS allows for tax breaks to rental property owners who have depreciation on their homes. The deduction can be written off according to the expected life of the property. For residential rentals, that’s 27.5 years on paper. You can only deprecate the buildings and improvements, and not the land that your property sits on. Your rental property can begin depreciating as soon as it’s ready to hit the market.
You can also deduct for expenses associated with your property. Anything that takes away from your rental income, including management fees, tax advice and preparation fees, cleaning fees, maintenance, insurance, property taxes, mortgage interest and other fees, are tax deductible.
These tax benefits, including depreciation and deduction, make rental property an excellent investment option. You can end up earning more than you would with other types of investments. It’s a good vehicle to pay for college education and fund a retirement account.
For more information about the tax benefits that are available to you as a rental property owner, we encourage you to read IRS Publication 527. There are a number of excellent opportunities in the Atlanta market right now. If you’re ready to get started, please contact us at Solutions Realty Network.