Tax Allowable Rental Property Expenses: Insurance, Cleaning/Maintenance, and Repairs

You’ll want to ascertain that all expert services and fees are arranged adequately and accurately documented for the objectives of taxation conformity, now that you’ve chosen to lease property for income. In this article, we will name drop a few of these important costs.

Insurance

Insurance coverage installments are prepaid ahead of the given time period. An illustration here might be: you purchased insurance protection with this particular property on March 2012 for $1200. April 2012 to March 31, 2013 would be the protection lifetime of this plan. Because the policy period does extend past the present tax year, you should apportion and identify the insurance premiums pertinent to the present year only and then bring forward the rest for the next reporting year. In this illustration your allowable premium deduction would be $900 (9 months April to Dec 2012) or $100 per month of eligible rental use.

Personal and business customers can often receive a discounted charge if the insurer is willing to combine their premium plans. Just the company rental property pertinent portion may be deducted. You need to use your personal tax return to deduct any non-business or private utilization. Finally, Title Insurance is not applicable as an expenditure and has to be part of the Cost Basis of the rental property.

Cleaning and Maintenance

The everyday upkeep of the property is a deductible expenditure given it is for common spaces and day to day cleanliness. Still, the expenses will only be deductible if they’re not on personal use days, but are on allowable rental days. To ensure that the property is in great condition and working order, you can try what various other property owners do, and employ a local area hired company to maintain the rental property. This could involve such services as window cleaning, dusting furniture, appliance cleaning and general maintenance. Structural maintenance and modifications are not allowed, so must be included in the property’s Cost Basis.

Repairs

Once in a while, there might be some necessity to fix an appliance, do a bit of painting, or any other task which does not demand a major renovation of the rental property structure. These expenses that are common and essential are tax deductible depending on the rental length of time.

Don’t incorporate any kind of times which would be considered to be private use times, because costs are only deductible against the income of the property. The only expenses which are authorized are those which are related to the approved rental timeframe, directly.

On the IRS’s webpage, you’ll find various reports you may need. Reference IRS Publication 527 for additional information.


Huddleston CPA+John Huddleston has written extensively on tax related subjects of interest to small business owners. Since 2002, he has been the owner of Huddleston Tax CPAs. He is a graduate of Washington State University and the University of Washington School of Law.

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Seattle CPAs+John Huddleston has written extensively on tax related subjects of interest to small business owners. He is a graduate of Washington State University and the University of Washington School of Law.

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