Tax season is upon us, and understanding real estate taxes for landlords, investors, and property managers is essential. As with any business, taxes can play a big role in your long-term ROI. Understanding taxes, from 1099s to rental deductions and everything in between, is key to get the most out of your real estate business.
For property managers and entrepreneurs within real estate, understanding taxes is just good business sense and will allow you to steer your owners on the right path (with the help of a CPA). Money earned through real estate investment carries less significant tax penalties when compared to general income, and savvy landlords and investors take the proper steps to minimize their tax burden and pocket more money.
Consider this roundup your intro to real estate taxes, where you can learn all the basics and a few advanced strategies to help with your taxes and tax planning for the next year.
Learn How to File and E-file 1099’s for Your Rental Business:
Whether you are a landlord, real estate investor, or property manager, be sure you understand the 1099 filing requirements for this tax year. Current requirements mean that most 1099s will need to be completed through an E-file process. The IRS has set the penalties for late filing from $60-$330 per return depending on how late the form is submitted past the 1099 due date. If you have Rentec Direct property management software, this process is quite seamless through integration with Nelco. Rentec Direct and Nelco recently hosted a training covering how to file your 1099’s that has valuable info you may need; the recording link is below.
Learn more: How to File Your 1099 Tax Forms With Nelco | Live Training Recap
Understand Potential Rental Deductions:
In real estate, minimizing your taxes means maximizing your deductions, and for some landlords and investors, capitalizing on those deductions can have a big impact on your bottom line. If you are not sure whether you are getting the most out of your real estate deductions, be sure to consult with a tax professional and a financial advisor who can help you address the deductions for this current tax season, but can also inform you of areas where some tax planning could provide additional deductions in the future.
Remember that just about every real estate expense is deductible, and there are some deductions that often go overlooked.
Real estate deductions for landlords can include:
- Home Office
- Routine Maintenance Expenses
- Unexpected Repairs
- Mileage (when related to the rental)
- Unit Utilities
- Certain Taxes
- Travel Costs (when related to your rental business)
- Landlord Insurance
- Mortgage Interest
- Depreciation
- Legal & Professional Fees
- Supplies or Software
- Property Management Fees
Learn more: Tax Tips for Rental Properties – Rental Income and Deductions for Landlords
Learn About the Importance of Tax Planning for the Year Ahead:
Investing in real estate can be a powerful opportunity, but without the right expertise, especially in the realm of taxes, you may not get the most out of your investment. Simply looking at your tax savings at the end of the year is not enough. Tax planning is essential. There are tax advantages, deductions, savings, and ownership strategies designed to maximize your profits for years.
Real estate tax experts Amanda Han and Matt MacFarland from Keystone CPA showed how investors can make the most of their real estate investments in a jam-packed informational webinar session hosted by Rentec Direct. While this session was recorded in 2024, many insightful tips are true year-over-year. If you missed this free live training, don’t hesitate to watch the recorded webinar and begin tax strategies to maximize your investments for this year.
Learn more: Tax Planning for Landlords and Real Estate Investors 2024: Webinar Recap
Develop Strategies for Investing With Tax Planning In Mind:
Tax planning can help owners and landlords invest more confidently. Savvy investors in real estate use helpful strategies to minimize their tax burden and maximize the wealth-building potential of their real estate investments. From taking advantage of opportunities like a 1031 exchange to avoid capital gains tax, to owning properties in a self-directed IRA, to other helpful tips, this article offers key tax insight that may help new and experienced investors alike.
Learn more: 9 Strategies for Minimizing Taxes When Investing in Real Estate