Whether you own ten or a thousand income properties, there’s one constant—taxes! The law stipulates that rental property owners should report what their real estate investments generate. All the income from leasing or renting is taxable, and it is sometimes challenging for first-time investors to determine what is taxable. If you are planning to venture into real estate, working with a professional property management company is advisable to make your ownership journey less stressful and a success. 3 Options Realty has seasoned property managers with extensive industry knowledge ready to help you comply with tax laws. Here are things you should know about reporting rental income.
Owning real estate is a lucrative opportunity when done right. However, remembering some generated income causes hefty fines, penalties, and late fees. This is often a result of poor record keeping of all rental income and expenses. If you need help to stay compliant, consider hiring a property management company to help you maneuver the industry without legal infringements. In addition, we support your operating expenses and purchases with receipts, invoices, contracts, and supporting documents.
Two types of expenses are associated with owning real estate: capital and current. Capital expenses offer lasting advantages, such as new energy-efficient windows or roofing. Current expenses are the costs of maintaining the property, such as making repairs or painting the interior to improve the building’s condition. Landlords can take advantage of deductions, such as accounting fees, advertising costs, insurance premiums, lease cancellation fees, utilities, and property taxes. If you need professional help to ensure you take advantage of applicable deductions, it may be time to onboard a property management company in Lawrenceville.
Many property owners received government help for rental expenses and income during the coronavirus pandemic. If you are a beneficiary of this type of support, you must include these amounts in your rental income or minimize your rental expenses by the amount received. In addition, government loans are not taxable, but any forgivable part is taxable in the same year it is received.
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Read MoreLandlords should know what is deductible, and what’s not. Fees and costs from penalties, repayments on the principal of the mortgage, land transfer tax, or the value of your labor equity can’t be deducted. As mentioned, investing in real estate is a profitable career. With that in mind, you should not do it alone. Our expert property managers can help you report rental income accurately every year, protecting you from costly fines or legal action.
Real estate investments can be challenging and overwhelming if you handle everything alone. This is often the reason for inaccurate reporting and the subsequent financial and legal repercussions. The best way to prevent such scenarios is to hire a property management company. Contact us at 3 Options Realty to schedule a consultation with our representatives and kick-start your investment journey correctly. We leverage extensive experience and knowledge to help property owners maximize their investments.
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