Gastonia property management offers many benefits to property owners by way of managing the whole show, maintaining the property, dealing with tenants, and finding new tenants. Apart from all these services, a property owner can also look forward to several tax advantages when a property management company is hired. Even though hiring a service for managing a property is an additional expense, these fees are also eligible for tax deductions.
Fees Charged by Property Management Service
Property owners, who engage any services for maintaining their investments, can claim tax deductions on such costs. A landlord can claim the entire service cost based on the statements and invoices issued by the property management company. It is important for property owners to keep all these documents as they prove the eligibility for the tax deductions.
Rental Expenses Deductions
Rental expenses deductions can fall into different categories. Certain expenses can be taken fully as deductions, while certain expenses that fall into the category of capital improvements have to be depreciated. Most maintenance expenses can be fully written off, such as cost of repairs to walls, windows, plumbing, electrical systems, and appliances.
The capital expense category will include things that lengthen the life of the units or enhance the value of the property. These expenses can include cost of renovating a basement, installing a new roof, new landscaping and so on. Another category that can be written off fully is administrative expenses. This category will include legal fees, credit checks, cost of advertising vacancies, and so on.
When a property owner has engaged Gastonia property management services, it becomes easy to keep track of all these expenses. Since the property manager will be handling day-to-day issues all maintenance, repairs, administrative, and renovation costs will be routed through invoices from the property management company to the landlord. Hence, the expenses are automatically categorized in different invoices and the property owner only has to retain these invoices for claiming the tax deductions.
Claiming Tax Deductions
When the property owner is renting out dwelling units and is providing limited services to tenants such as trash collection and utilities, then the tax information can be reported in Schedule E. In this schedule, the landlord can state the expenses, depreciation, and rental income from the property/s. Multiple schedules can be filed for each property, but ultimately all the totals have to be listed in one of the forms. This final form will also have the total expenses of property management that is being claimed as a deduction.
If the property owner is providing additional service to tenants such regular housecleaning, linen changes, and other conveniences, then the income and expenses have to be filed in Schedule C. To qualify for submitting Schedule C, the property owner should be providing much more services than the expected ones such as general cleaning and maintenance of the common areas, and trash collection. The deduction of fees and other expenses incurred by the property management company can be completed on Schedule C for such property owners.