Tax Prep 101: Deductions for Real Estate

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Real estate has long offered some of the best tax benefits of any investment, with a remarkable number of allowed deductions.

As a homeowner, you can deduct your mortgage interest payments and real estate taxes each year. You can also deduct all the points you paid to purchase your home, as it’s considered pre-paid interest, in the year you purchased your home. Remember if you buy a home earlier in the year, you’ll have more months of mortgage interest to deduct come tax time.
As an owner of a rental property, you also benefit from tax deductions, including:
  • Interest on your mortgage
  • Ordinary and necessary repairs
  • Local and long distance travel expenses related to upkeep or tenant relations to and from your rental (but make sure you document them well)
  • The cost of your real estate purchase through depreciation of the property over several years
  • All the fees you pay to professionals – a lawyer, property manager, CPA, real estate investment advisor, and a contractor to do repairs