As a landlord, you will have several important tax considerations to consider. It can be a bit of a minefield and you 'don't know what you don't know'. That's why it's vital to have a trusted accountant to help you maximise your returns and minimise your tax liability.
Here are the 5 top questions landlords should ask their accountant:
Rental income and reporting:
How should rental income be reported on tax returns?
Are there any specific forms or schedules to be filed for rental income?
What types of rental income are taxable (e.g., rent, security deposits)?
Are there any exemptions or deductions available for rental income?
What expenses can be deducted from rental income for tax purposes?
Are there any specific limitations or restrictions on deductible expenses?
Can I deduct expenses related to property maintenance, repairs, or renovations?
Are there any special rules for claiming deductions on rental properties?
Depreciation and capital improvements:
How does depreciation work for rental properties?
Are there any specific rules or methods for calculating depreciation?
Can I claim depreciation on capital improvements or major renovations?
Are there any rules if the property is sold?
Rental property deductions and credits:
Can I deduct mortgage interest or property taxes paid on the rental property?
Are there any deductions available for property management or professional fees?
Are there any tax credits or incentives for certain types of rental properties?
Can I deduct expenses related to advertising or finding tenants?
Recordkeeping and documentation:
What type of records and documents should I keep for tax purposes?
How long should I retain tax-related records and documentation?
Are there any specific requirements for recordkeeping or reporting to the tax authorities?
Are there any penalties for inadequate recordkeeping or non-compliance with tax obligations?
It's essential for landlords to consult with a tax professional or accountant who is familiar with rental property taxation to ensure accurate reporting and compliance with tax laws specifically for landlords.
Equally, it's important to maintain accurate records and documentation related to rental income, expenses, and property-related transactions. Keep receipts, invoices, lease agreements, and other relevant documents as proof of income and expenses.
Consult a tax professional who understands landlords for specific recordkeeping requirements and recommended retention periods.
A property accountant can offer financial planning services beyond tax compliance. They can provide guidance on structuring rental property ownership, evaluating the financial implications of property investments and developing strategies to optimise overall financial performance.
Not only that, but a really good accountant will also be able to advise on funding options for your property portfolio.
Overall, an accountant with experience in rental property taxation can offer valuable expertise, save time, minimise errors, and help landlords navigate the complex realm of tax compliance.
Purple Accounts in Warrington specialises in helping landlords as expert property accountants and funding advisors. Our monthly landlord package provides peace of mind and helps you to achieve your goals property business goals. As Xero Gold Champion Partners using Xero for Landlords you;re in the best hands.