Property Management + Tax Deductions

 Why Property Management Fee Is a Tax-Deductible Expense

When you own a rental property, the responsibilities include purchasing monthly rent and paying the required building expenses. You are also supposed to screen prospective tenants, maintain the property as per the law and address any complaint. Managing a rental property is a tedious job. Consequently, it would be best to hire a property manager.  In case you opt to hire one, this is automatically an added expense, but it also qualifies for legitimate deduction when paying your taxes.

Rental Property Deduction

There are numerous categories for rental properties. In most cases, some deductions are in full cost expense, and others depreciate over time like capital improvements.  Some maintenance expenses are categorized as full cost expenses: repairing broken windows and patching walls.  Capital expenses refer to those that enhance the value of your home. Moreover, the state should write off full administrative expenses such as hiring a property management and advertising your property.

Schedule E

On this schedule, you are supposed to report your rental income, expenses, and depreciation.  In case you have numerous properties, you can file more than one schedule to document all the properties you own. Eventually, you should add the totals and list them on a single form. In case you had hired property management services, you should deduct their expenses on this form.

Schedule C

In case you offer laundry services, maid service, or regular house cleaning, you should file Schedule C. If you had contracted a property management service to provide these essential services, you should deduct those expenses from Schedule C.

Property management services expenses are tax-deductible.  Nevertheless, to claim the entire cost of services, you should safely keep statements and invoices from the property management company. Such documents are evidence that makes the tax deduction eligible. Ultimately, hiring a property manager will make your work easier and offer you a few tax advantages.