Taxes on New Landlords

Posted on October 3, 2021

Taxes on New Landlords

If you are a new landlord and have put your property on rent, you will be required to pay additional taxes to the government. That is because the IRS considers the rent you are getting as income, and income from any source is taxable under the law.

Even though you will be paying additional taxes on your rental property, you can save money on this tax through depreciation. It is the largest deduction you can get on rental. You can take the help of a tax preparer in calculating the tax basis and depreciable basis. There are chances that you might be using the services of a tax preparer already for filing of tax returns. You can save much money on taxes if you plan your rental taxes and get guidance from your tax preparer.

Expenditures can be property tax, maintenance costs, mortgage interest etc. that you can use to bring down your income from the rental property. If your expenditures exceed your profit, you can show losses in your tax return. If you show profit, you will need to pay taxes depending on how much profit you made.

You can use IRS Form Schedule E for filing your taxes on your rental property. You will need to record your net income loss or profit to the Schedule E form. From there you will need to transfer it to IRS Form 1040.

It is best to begin keeping a record of your expenditures on your rental property so that you can save money on taxes. Planning of taxes goes a long way in saving big money in the long run.

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