Many people are trying to find ways to capitalize on the economic recession, build some equity in real estate, and also earn money in the process these days. Purchasing rental property and reaping the tax advantages is one primary path to doing this. In order to do this, you also have to be willing to be a landlord, which is not something most people consider throughout the decision-making process.
Some of the tax benefits of owning rental property should be discussed first. Writing off any excess mortgage interest and taxes assessed on your rental property is the first, most basic thing you can do. Since it saves real estate owners upfront costs in the long run, this is a real benefit. Generally different from what you would do for your primary residence, you should also note, though, that you must amortize any mortgage points you pay.
Next, any operating expenses you could feasibly incur can be written off, as well. Any utilities you have agreed to be paid, for example, can be written off. The same goes for the cost of insurance premiums, homeowner association fees if you own a condominium or a townhome, and expenses going toward repairs and maintenance of the property, to name a few. You can also depreciate the cost of your rental property over approximately 30 years while its value is still hopefully increasing.
You probably love the sound of all of this. Tenants are also part of the deal, though. You can find great people as tenants, if you know where to look. Good tenants keep on top of property maintenance, paying rent and informing you when there is need for a repair. Some tenants just aren't up to par, though, so you must assess your patience and determination before proceeding. What if you have a tenant who doesn't value paying rent on time or paying it at all? What if they have no qualms about destroying the residence?
You consequently have to know your own limits, even though the benefits of rental property tax advantages are great. This might be a wise choice to generate extra income in the real estate investment sphere, though, if you think you're up for the challenge of being a landlord.
Some of the tax benefits of owning rental property should be discussed first. Writing off any excess mortgage interest and taxes assessed on your rental property is the first, most basic thing you can do. Since it saves real estate owners upfront costs in the long run, this is a real benefit. Generally different from what you would do for your primary residence, you should also note, though, that you must amortize any mortgage points you pay.
Next, any operating expenses you could feasibly incur can be written off, as well. Any utilities you have agreed to be paid, for example, can be written off. The same goes for the cost of insurance premiums, homeowner association fees if you own a condominium or a townhome, and expenses going toward repairs and maintenance of the property, to name a few. You can also depreciate the cost of your rental property over approximately 30 years while its value is still hopefully increasing.
You probably love the sound of all of this. Tenants are also part of the deal, though. You can find great people as tenants, if you know where to look. Good tenants keep on top of property maintenance, paying rent and informing you when there is need for a repair. Some tenants just aren't up to par, though, so you must assess your patience and determination before proceeding. What if you have a tenant who doesn't value paying rent on time or paying it at all? What if they have no qualms about destroying the residence?
You consequently have to know your own limits, even though the benefits of rental property tax advantages are great. This might be a wise choice to generate extra income in the real estate investment sphere, though, if you think you're up for the challenge of being a landlord.
About the Author:
Planning to move or relocate in Colorado? Receive helpful information about Erie real estate or real estate in Superior. Also, find detailed MLS real estate data on specific homes or properties for sale and receive help from real estate agents.
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