Can Mortgage Payment Really Be Deducted From Taxes?

By Allan Marsh

Being a landlord of esteem (or so we hope), it should be your objective to make full use of the tax exemptions that owning a piece of property can afford you. But aside from the usual deductions, there are some that are less known to landlords. This can mean a number of things, such as the expenses incurred for cancelling a lease, reimbursements to renters for expenses made heretofore, etc. There can be many other expenses, but you should be sure you are taking note of each of them for future use.

Interest. Mortgage interest payments on the loan to purchase the rental property are a deductible cost, but make sure you also deduct interest on loans for improvements to the property, as well as credit card interest for credit card accounts you use to purchase any items or services for the property. Landlords generally overlook that interest can be a sizeable deductible expense.

Depreciation. Over a period of time, the cost of your rental property would be recovered through depreciation. You can claim depreciation over a good 27 years and a half once you have owned the property for over two years.

Repairs. Your list may also include the cost of repairs done to and on the rental property, provided they are deducted in the same year they are done. This could mean a number of things, including, but not limited to a new paint job, repairing windows, leak repair, new flooring, new wall plastering, etc. To qualify, you have to make sure the expenses are ordinary expenses in the cost of running the rental property, reasonable costs and not capital improvements.

Travel. Travel expenses can be deducted if the expenses are for renter association or landlord meetings, repair-related costs or the routine trip to your property to collect the rent or answer any inquiries the renters may have, or maybe for dispute resolution. If you have to make a trip to a service provider, like a plumber or general repairman, this can also be a deductible cost. If you are travelling from a distance, you can deduct the cost of your hotel as well.

Home Office. The portion of your mortgage or rent that is used to facilitate your rental business (only if you use your home as an office) is a deductible expense.

Losses. If you may suffer any losses, they can be deducted. These include fire and weather damage or floods. Only the non-reimbursed portion can be deducted if you happen to have home insurance.

Insurance. The premiums you pay monthly on your home insurance are a deductible cost. Most landlords have insurance against floods, fires, liability and theft on the property.

Services. Any kind of fees you pay for services related to the property are deductible, such as attorney fees, accountant fees, payments to property management companies, real estate investment advisors and other professionals who provide you services to properly manage your rental property.

But do not misconstrue this as every single expense being considered deductible. If you have a loss of rental due to vacancy are not deductible, and certain modifications that are capital in nature such as a new roof, room additions, a new fence, etc. are not deductible.

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