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Rental Property Tax Deductions | Investing for Beginners - YouTube
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you know my accountant likes to say if
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you are paying taxes in your real estate
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investor then chances are you're doing
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something wrong today's video we're
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going to dive in to the top tax
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deductions for real estate investors hey
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there everyone I'm Clayton Morris on the
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founder and president of Morris invest
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or turnkey real estate provider
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I've rehabbed hundreds of homes that I'm
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a longtime real estate investor and one
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of the great benefits of real estate
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investing of course is the tax benefits
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again my accountant one of the greatest
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accountants in the country for real
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estate has said if you're a real estate
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investor you should not be paying taxes
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you should be able to basically not pay
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anything in taxes if you're a real
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estate investor so the problem is that
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many people don't know or fail to take
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advantage of all the great tax benefits
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of being a landlord so if you own rental
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properties or you're thinking about
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buying rental properties and getting
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started there are some great
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depreciation there's some great benefits
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that you need to know about in order to
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save on your taxes ok let's dive into it
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so we're going to go through ten of the
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top deductions that you can take if
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you've got real estate rental real
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estate now I want to be very clear it's
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very important that you work with a tax
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accountant that understands real estate
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if they don't understand real estate and
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you are building up your rental
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portfolio chances are you need to find a
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better accountant okay because again you
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should not be paying anything in taxes
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if you are a real estate investor there
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are so many great ways to leverage your
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properties so well you know you've got
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income coming in from rent great are you
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then also making repairs are you buying
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additional properties all of those
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things will offset the income that you
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have coming in and maybe you have a
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salary job your normal nine-to-five job
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great are you buying rental properties
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in an LLC and therefore offsetting the
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money that you have coming in from your
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nine-to-five job see these are all ways
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that you can mitigate your overall tax
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burden
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remember the tax code in this country in
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the United States of America was written
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for entrepreneurship it is incentivizing
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you to invest in the economy and to be
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an entrepreneur
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almost the entire
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Xcode talks about all of the things you
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can claim there's a very minimal amount
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of things in the tax code where you
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actually get charged so it really does
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benefit you to take advantage of the tax
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code the way that it was written
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remember almost every member of Congress
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owns real estate why well because they
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helped write the laws they know that
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owning real estate crushes your taxes
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okay
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let's dive into it the top 10 things
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that you can claim on your taxes for
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benefits all right the first thing and
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one of the most important deductions
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that you can claim as a landlord is
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interest so number one interest now this
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can be interest on mortgages loans home
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equity lines of credit if you are using
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financing to acquire properties interest
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loans is a write-off this is something
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you can claim against the income that
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you're bringing in from your from your
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tenants on your properties so number one
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interest number two on the list is
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depreciation I'm sure you've heard about
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depreciation it is simply the ability
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for you to say that this asset that you
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own this house over twenty seven point
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five years I'm able to say that this
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asset is depreciating because a tenant
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is living in the property so the IRS
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lets you depreciate this asset which
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means you get to depreciate a chunk of
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that cost on your taxes every year for
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twenty seven point five years that's an
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incredible deduction that you should be
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taking advantage of the beauty is that
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just because a tenant is living in there
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doesn't mean the asset is actually worth
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less no of course not actually real
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estate tends to appreciate so you get to
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claim depreciation while your asset is
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probably appreciating another killer
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strategy from the IRS number three on
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your list is repairs now of course all
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of the rental properties that I buy
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we're doing a repair on so I'm doing all
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of the construction on these properties
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and those are a write-off that repairs
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are deductible on your taxes in the year
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that you did the repairs so in 2018 2017
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if you have to put a new roof on your
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rental property boom tax deduction
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brilliant you get to write that off in
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the year that you did those repairs so
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repairs help offset any income that you
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have coming in because you're improving
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the
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the asset you're improving the
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neighborhood by improving your rental
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property number four on the list local
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travel I very often will fly into my
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rental markets or I'll drive and rent a
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car mileage all of those things are a
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tax deduction so let's say you owned
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rental properties in your own backyard
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then you anytime you get in the car have
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to drive down to the property you keep
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track of all of that mileage you keep
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track of you know the automobile if you
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maybe you even own a business so you own
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an LLC you own the rental properties in
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the LLC and you have a car that is
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specifically geared just to running the
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business you have to run back and forth
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between your properties you can claim
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part of that vehicle as a business
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expense on your taxes so local travel
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keeping track of your mileage keeping
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track of all of those things incredibly
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important and again a great write-off if
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you own rental properties number five
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long distance travel okay so forget
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properties being in your backyard I live
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in New Jersey there's no way I would
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ever buy rental properties in my
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backyard because as we say in other
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videos here we have videos here on ROI
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the ROI is just too low you know I want
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to go into the Midwest and parts of this
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country where I can get a massive bang
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for my buck
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well I'll fly out to my different
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markets a couple of times a year and all
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of that travel of course is you guessed
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it a write-off
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so my airfare my hotel my rental car my
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dinners my meetings with my team all of
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those things and the same goes for you
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as well
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if you're making a flight into an area
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to see one of your rental properties
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that's alright off number six on the
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list is a home office now I run my
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business from my home I've got a door on
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the office and a closet in my office and
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therefore I get to claim my home office
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as a business expense a portion of your
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home so that means my printing you know
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my printer my computer all of that is a
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business expense now you as a landlord
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can also claim part of your home
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especially if you have an office set up
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as a business expense now you'll want to
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check with your accountant to make sure
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you're doing it right but typically you
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need to have a door on that room and it
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has to be used just for an office like
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it can't be a bedroom with a desk and a
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computer because you're sleeping in that
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room that doesn't count so as long as
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it's
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it's designated as a home office and
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you're using it as your business office
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to be a landlord and to manage your
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spreadsheets and to check your rental
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income and all of those things then you
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can deduct a portion of that on your
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taxes again check with your accountant
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on how that all breaks down but for me
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as a business owner my office I use it
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every day I'm at my computer on the
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phone non-stop so it absolutely is an
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office I don't also sleep there I guess
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sometimes I maybe sleep in my chair that
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my armchair that I've got in there get a
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little nap in in the afternoon
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does that count I don't know I'll find
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out I'll ask my accountant all right
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number seven on that list is employees
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that you get to deduct so if you're
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hiring contractors or if you have people
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on staff like we don't subcontract out
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anything on my company we have people on
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staff employees that we pay and also we
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then work with contractors and you may
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work with contractors to fix your roof
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to fix windows etc and all of those
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pieces are part of this puzzle you can
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claim their wages on your taxes that is
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an expense it's a business expense that
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it's a write-off so again you're helping
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the broader economy here this is why the
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tax code was written this way right
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you're hiring people you're improving a
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neighborhood so that's why Congress
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wants to incentivize you to take these
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advantages you can write these things
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off on your taxes do not forget to do
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that number eight and this is something
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we don't want to have to talk about but
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casualty losses that is number eight on
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the list casualty losses what does that
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mean well your rental house is involved
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in a flood if there's a fire you can
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actually write a portion of that off on
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your taxes as a loss so casualty loss
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fire insurance yes it'll cover it but
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they'll give you some room to breathe
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here with the IRS to be able to write
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that off on your taxes so don't forget
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to write off casualty losses on your
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taxes number nine on the list is
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insurance now on every rental property I
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own I have rental insurance I mean I
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have insurance on the properties so any
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insurance you carry for your contractors
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or anything you get to write off the
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premiums on your taxes at the end of the
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year again that is a business expense so
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any insurance you're carrying that is a
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write-off
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your taxes do not forget that people
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forget that they get to you know people
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build in insurance into their expenses
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when they're buying a rental property
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and they're thinking about how that
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affects their cash on cash return but
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remember that the insurance that you're
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paying for is a write-off at the end of
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the year so make sure you check with
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your accountant and make sure you're
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writing off insurance at the end of the
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year and number 10 on the list is paying
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for professional or legal services now
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any fee that you're paying to a property
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management company or a lawyer is a
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write-off that's a business expense
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so think any work that needs to be done
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by your property management team may be
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the lease up fee that they're going to
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charge you one hundred and fifty dollars
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to do background checks on the tenant
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before they put them in the property
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boom
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that's a write-off you're they have to
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run out and do some some work on the
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property boom that's a write-off you
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hire a lawyer to draft up a contract
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that is a write-off all of those things
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round out one of the reasons why are one
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of the many reasons why real estate
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investing is such a killer way to save
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on your taxes again I hope you enjoyed
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this list of ten great ways to save on
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your taxes we have other great videos
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here on the channel we talked about
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finding out how to nail down ROI if you
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want to buy rental properties and have
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them done for you totally turnkey we
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have a whole playlist right here devoted
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to turnkey real estate investing we have
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a DIY playlist as well so you can if you
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want to get your hands dirty and get in
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there and do the plumbing and hanging
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drywall yourself you can watch those
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videos but most importantly please
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subscribe right there just a little
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button and subscribe to our Channel we
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publish videos multiple times a week and
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we'll be back here with another video my
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goal is for you to get out there and
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take action and become a real estate
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investor we'll see you next time
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everyone
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