real estate tax write offs: some basics
Should you be taking tax tips from two real estate podcast hosts? Questionable! But, if you did a google search and it landed you here, this is not the worst place to get started. Here's some tips and tricks for real estate tax write offs.
7 common tax deductions
You can write off mortgage interest.
You can write off property taxes up to $10K, although there is a rumor that President Biden is trying to push this to $80K. That said, Colorado has pretty low property taxes, so it seems unlikely this one will impact you.
You can write off repairs to your home. Please note home repairs are different than home improvements. A home repair is fixing the baseboard that your puppy ate just like ours did this week (!) and a home improvement is adding a third bathroom.
You can write off property management. Can I write off short-term rental property managers? Yes. Can I write off Airbnb property managers? Yes. Can I write off long-term property managers? Yes. Long-term property managers usually take between 8-12% of your returns, while quality short-term property managers usually take between 15-30%, so you can save a lot on taxes by writing off your Airbnb property management.
Can I write off travel expenses? Yes! This is a big reason why Colorado is a popular destination for second homes. If you can combine your vacation with some business-related travel expenses, you can write off your travel.
Depreciation. The IRS considers the usual life of a residential property to be 27.5 years. Note: depreciation is on the property and not on the land. Also, for the first year, when you purchased matters. This table can help you figure out how much you can depreciate the first year.
Utilities: time to write off wifi, water, heating/cooling, snow removal, the shovel for the snow removal, etc.