Allowable for Tax Deduction Rental Property Expenses: Insurance, Cleaning/Maintenance, and Repairs

You must determine that all of the services and costs are arranged adequately and fully reported for the objectives of IRS conformity, now that you have chosen to rent out your property for income. In this article, we are going to name a few of these important costs.

Insurance

Insurance policy payments are pre-paid before the specified period of time. Scenario: You bought an insurance plan for the rental property in March 2012 for $1200. April 2012 to March 31, 2013 is the coverage period of this insurance policy. Because the insurance coverage time period will exceed the present tax year, you must identify the payments pertinent for this present tax year only and carry forward the rest for the next filing period. This could mean that $900 (9 months April to Dec 2012) or $100 per month of qualified rental property use could be the permitted premium.

Note that many Insurance carriers routinely combine insurance premium plans between personal and business clients for a discount rate. Only the company rental property applicable part can be deducted. The individual and non-business related use may be allowable on your individual tax return. You can include Title Insurance in the Cost Basis of the property, as it is not an allowable expense.

Cleaning and Maintenance

If it is used on regular cleaning and repair of commonly used places, then regular upkeep of the rental property can be an allowed expense. Still, the costs will only be deductible if they are not on personal use days, but are on allowed rental hours. To ensure the rental property is in good condition and running order, you can try what many other rental property owners do, and engage a local area contracted service to maintain your rental property. These types of services will give you a number of expert services such as basic upkeep, dusting furniture, washing windows, and cleaning appliances. Major structural improvements and changes are not allowed, so should be covered in the rental property’s Cost Basis.

Repairs

There are sometimes jobs which don’t require serious reconstruction of the framework of the property like repainting or equipment repair service. Depending on the rental period, it is possible to deduct these kinds of necessary and ordinary expenses.

It is important to be aware that these expenses that are commonly deductible in relation to the income of the property, you cannot include those periods that are deemed private days of use. Just those expenditures that are related to the authorized rental timeframe are permitted.

  • On the IRS’s webpage, you’ll find numerous reports you need. If you need more info, view IRS Publication 527.

Bellevue CPA+John Huddleston has written extensively on tax related subjects of interest to small business owners. He is a graduate of Washington State University and the University of Washington School of Law.

  • Huddleston Tax CPAs / Huddleston Tax CPAs – Bellevue CPAs
    Certified Public Accountants Focused on Small Business
    40 Lake Bellevue Suite 100 / Bellevue, WA 98005
    (425) 273-6512

    Huddleston Tax CPAs & accountants provide tax preparation, tax planning, business coaching,
    QuickBooks consulting, bookkeeping, payroll, offer in compromise debt relief, and business valuation services for small business.

    We serve: Tukwila, SeaTac, Renton. We have a few meeting locations. Call to meet John C. Huddleston, J.D., LL.M., CPA, Lance Hulbert, CPA, Grace Lee-Choi, CPA, Jennifer Zhou, CPA, or Jessica Chisholm, CPA. Member WSCPA.