Purchasing rental property in Chicago can be a great wealth gaining opportunity. Oftentimes landlords are unaware of many potential advantages that rentals provide. If you are interested in purchasing a Chicago rental, please contact us for even more tips! As always, check in with your tax professional before making any major changes.
Renting property provides many tax deductions. Many you may be aware of, some you may not. The following list provides some ideas on how to get the most from your investment.
Interest
Mortgage interest payments and credit card interest can be deducted for items which are purchased or used to improve the property.
Repairs
Any reasonable repairs (such as replacing carpet and paint) to the property are 100% deductible the year they occur.
Depreciation
This allows you to get tax credit for the cost of the rental year by year.
Mileage or Vehicle Expenses
Travel to and from the rental and to surrounding repair stores are considered deductible expenses. You can choose to deduct actual expenses or mileage, depending on your situation. If you live far from your rental, you can also deduct lodging, meals and other properly documented travel expenses.
Service Providers
Any wages paid for workers hired to perform services relating to the rental can be deducted, whether the service provider is an independent contractor or an employee. Legal and professional service providers can be deducted as operating expenses, too.
Insurance
Insurance premiums for fire, theft, liability and floods are deductible, as well as some insurance costs relating to employees if a property needs a manager. Call your insurance agent to find out what coverage you would need for your Chicago rental property.
