As a landlord or similar business owner, you pay a wide range of associated costs to fulfill your business duties. Many of these costs are eligible for tax deduction, enabling you to subtract them from the income you pay taxes on and reduce your liability.
Can you claim tax relief on service charges? Yes, this is generally one of the allowable deductions. Learn what landlords can and cannot claim and how to write off these expenses.
Under IRS guidelines, property owners and managers are eligible for certain tax deductions. However, you must be “actively involved” in the rental property to take these deductions, which means you participate in its management and operation and receive rental income from it. The IRS has specific guidelines for “active management,” so be sure you meet these before you begin taking deductions.
As a landlord, you can deduct certain allowable expenses that are wholly and exclusively related to renting out the property. If you have any expenses that are partially for personal use, such as a cell phone, you use to communicate with tenants and as your personal phone, you can only deduct the portion of that expense related to your landlord duties.
So, can you claim tax relief on service charges? Usually. Landlords may be eligible for all of these tax deductions:
Each of these deductions comes with specific eligibility criteria, so it is worth speaking with a tax professional about which ones you may qualify for.
Landlords may be eligible to deduct a wide range of business expenses from their taxable income, including service charges. But you should be aware of certain costs that are generally not deductible.
Also, make sure you report rental income correctly. This may include rent along with tenant-paid expenses, security deposits you do not return to tenants, and trade services tenants offer in exchange for rent.
You will report your rental property income and expenses on Schedule E of your 1040 or 1040-SR. There is a space to input miscellaneous categories of expenses, allowing you to pencil in certain permitted costs to deduct them from your income.
You will need evidence to back up your claims of active participation in the rental property and all of the expenses you are deducting. Be sure to keep receipts, appointment books, and logs proving these claims. If the IRS were to audit you, you would have the necessary proof to support your deductions.
Can you claim tax relief on service charges? Yes, among many other expenses related to running a rental property. Levy & Associates can help you minimize tax liability by maximizing deductions. We can also help you avoid claiming the wrong deductions and potentially incurring fees or penalties.
Contact us today at 877-620-6490 or fill out our online form to schedule a consultation with our tax professionals.
Levy & Associates is available for free initial consultations. We’re happy to answer any questions you have about the audit process or address any concerns about your specific situation.
There’s never a good time to be audited, and the time-consuming process will take away from your business or family if you try to face it alone. Let us handle and coordinate communication, so you can return to your daily life.