Every year, people miss out on huge amounts of money in the form of tax deductions. However, as a property owner, the list of deductions you could miss out on gets even longer. Are you using your property tax deduction to its best advantage?
Hiring a property manager is a great way to get the tax breaks you deserve – as well as plenty of other perks in the deal. Not sure what having a property manager has to do with your taxes? We’ll teach you what you need to know.
Keep reading to learn how to save more this year!
Your Property Tax Deduction Options
As a property owner, there are all kinds of useful deductions you can take to maximize your tax savings.
For example, you probably already know that you can deduct the cost of repairs to the buildings that you own. You might even know that you can deduct the costs of personal property that you use as part of your business activities. And when you travel to your rental properties, you can also deduct those costs.
However, one thing few property owners are aware of is the property tax deductions for hiring employees and even independent contractors.
When you hire someone as part of your rental business, the wages you pay become a business expense that you can deduct at tax time. For some tasks, it might make more sense to hire a contractor. But for big jobs, such as property management, it can make more financial sense to hire someone to do it full time.
In addition to deducting the cost of their wages, you can also deduct the costs of other benefits you provide to your full-time employees. This might include the cost of health insurance, social security contributions, and more.
What Property Managers Can Do
What are the benefits of hiring a property manager? Let’s take a look at some of the ways this decision makes financial sense – beyond just offering tax savings.
1. Collect Payments on Time
Collecting and depositing rental payments from your tenants can be incredibly time-consuming. It can also get difficult to keep track of late payments or the late fees you need to charge.
A property manager makes collecting payment part of their job. This means there’s one less thing for you to worry about, and it will be easier to get your payments on time.
2. Screen New Tenants
You don’t want just anyone moving in. If you hire a property manager, you won’t just get a tax deduction opportunity. You’re also likely to get better tenants.
Especially when you have multiple properties, it can seem impossible to screen all the tenants who apply. But having a screening process helps ensure you that the only people who move in are the people who you really want on your property.
Your property manager will have the time to check important databases, such as a sex offender registry. They can also do criminal history checks, credit checks, and contact references on your behalf.
3. Save Money Long-Term
Some property owners might feel deterred from hiring a property manager by the costs. However, the tax benefits might help change your mind. And even without these benefits, there are still other ways a property manager can help you save money.
For example, they can address problems on your rental properties and ensure that repairs get done before they become too costly. They’ll help in the search for new tenants, so you won’t lose money because of vacancies. And they’ll stay organized while collecting rent, so a payment never gets missed.
Although you’ll need the funds to cover their salary, you just might find that hiring a property manager helps you save in the long run, especially when you factor in your property tax deduction.
4. Keep You Legal
Many laws govern the properties that you can rent out. However, keeping up with all the laws on your own can seem impossible. A property manager also helps you avoid any legal issues by making sure you’re always within the bounds of the law.
They’ll learn the federal, state, and local regulations so that you don’t have to. This saves you money too: you won’t face potential lawsuits or other legal problems, because you’ll always be compliant.
5. Maintain the Property
A well-maintained property keeps both your tenants and your neighbors happy. It also helps you find new tenants by making your property look and feel desirable to visitors.
Property maintenance can involve a lot of work from a whole team of people. Your property manager will find and manage that team, hiring contractors and employees as needed (with your approval, of course).
This helps ensure that issues on your property won’t interrupt your life. With a property manager, you’re no longer be personally responsible for finding and fixing issues on the property.
6. Keep Better Records
Keeping records helps you see the big picture of your property. You’ll know what needs to be repaired or inspected, and when. You’ll also have a nice package of financial information for when it’s time to do your taxes.
Keeping those records yourself is possible but challenging. It’s much better to hire a property manager to keep all your paperwork in order for you.
Is a Property Manager Right for You?
As you can probably see by now, hiring a property manager comes with a lot of compelling benefits. The property tax deduction you can claim might just help you make up your mind for good.
But where can you find a good property management company? Look no further. Contact us for the high-quality property management you’re looking for in south Florida!