Investing in real estate in the Denver or Aurora area can surpass other financial strategies for supplementing your income whether you are starting out or retired. With tax time just around the corner, it’s time to consider the tax advantages of using reputable property management in Denver. Not only are the real estate services provided by a property manager tax-deductible, but your property manager can keep your records better organized. According to an article by the Houston Chronicle, people who own rental properties can’t usually take time away from their occupations to manage and maintain their properties. In addition to allowing you to continue working in a full-time career or enjoying retirement, hiring a property management company in gives you tax advantages.
- Deducting what you can
According to the Houston Chronicle, you can deduct professional services such as property management. Typically, you can deduct the expenses of hiring a tax preparer as well. Using a property manager should lower your tax bill or increase your refund. Keep your invoices and statements for your tax preparer.
- Keeping you organized
Some people have a shoe-box organization system, which means they bring a shoebox full of receipts to their tax preparer. By using a good property manager, you will likely have a well-organized record of the income you made from tenants as well as the expenses that went out to pay for maintenance and repairs. You won’t miss any tax deductions if bookkeeping is not your strong suit. Most property managers keep an electronic copy of records.
- Qualifying for depreciation
Owning a rental property also qualifies you for rental property depreciation. A publication by the IRS points out you can recover the cost of your rental property that generates you income by “depreciating the property.” To depreciate your property you have to own the property, use it as a rental property and expect the property to last for more than one year and have a useful life. When you make major improvements to your rental property, it often counts under depreciation whereas maintenance is a deduction. Your tax adviser can help you with any complicated figures to determine the correct amount.
At Legacy Properties-PM, we are members of the NARPM, the National Association of Residential Property Managers. For more information on the tax advantages of using property management in Denver, please call 720.989.1996 or contact us.
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