Real Estate Professionals

red monopoly house in front of four green monopoly houses

There are a few different lenses to look at tax savings with real estate professionals in the greater Seattle area. So we’ll touch on a few briefly and provide some noteworthy points. If you have questions beyond this, get in touch with us.

Personal Residence

Deductible Expenses

  • Mortgage Interest
  • Points
  • Qualified Mortgage Insurance
  • Real Estate Taxes

Rental Property

Deductible Expenses

  • Advertising
  • Cleaning
  • Utilities
  • Insurance
  • Taxes
  • Interest

Notes

  • Report Income when the income is received
  • Security Deposits are not included in income
  • Rental expenses are deductible in the year paid
  • Start deducting rental income whether or not there is a tenant
  • Do not deduct uncollected rent.

Depreciation

(cost segregation studies are great way to save tax dollars here.)

  • Building
  • Appliances
  • Carpets
  • Furniture
  • Fences

Real Estate Professionals

Deductible Expenses

  • Advertising
  • Professional Fees
  • Educational Materials
  • Business Travel Expenses
  • Business Entertainment

House Flipping Notes

  • Can be taxes as either ordinary income or capital gain income
  • Ordinary treatment is ideal when you have losses
  • Capital Gain treatment is ideal when you have gains

Repairs Vs Improvements

The following chart will demonstrate how some of the more common improvements/repairs are categorized.

Repairs Improvements
Painting Room Additions
Fixing Floors New Roof
Fixing Leaks New Plumbing
Replacing Broken Windows New Carpet

If you’d like a bit more guidance, give us a call we’ll address your specific concerns, and help you establish a tax plan that works for you.