How To Claim Rental Property On Taxes – Wouldn’t it be nice to retire early? Or to build enough monthly cash flow through passive income so you can finally quit your day job? Of course that!!

Owning rental properties can be a great investment to help you get there. My early retirement plan is very dependent on rental income. Now I am specifically buying out of state rentals because the city I live in is too hot!! There are no deals here. I won’t let that stop me from reaching my goals though. I love having rental properties! If you shop right you can get some really great returns, just look at my last turnkey rental I bought and see for yourself. If you decide you want to buy a rental property, it is imperative that you are aware of all the tax advantages that are out there for us real estate investors to take advantage of. Taxes!! Love them or hate them. They will always be here!

How To Claim Rental Property On Taxes

How To Claim Rental Property On Taxes

However, there are many advantages to owning rental properties, including all the cool tax advantages that come with rental property. Today I’m going to show you the many rental tax deductions. It would be very beneficial for you to take full advantage of the tax deductions available to you.

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Please note that I am not a tax professional, attorney or CPA. I am simply a real estate investor giving you an overview of the many tax benefits I have learned from owning my own rentals. If you want to seek professional advice, contact a tax professional.

When you start with your first rental, you may be tempted to do your own taxes like I did. I thought it was a great idea and of course I thought it would do them good. As my rental portfolio grew, I decided to hire a tax professional and it was the best decision I ever made. It was through my CPA that I learned about most of these deductions not to mention he showed me other areas in my taxes that I did incorrectly. Oh! So learn from me folks, it’s best to hire a professional to deal with taxes. Just make sure you keep all receipts and log EVERYTHING!!

If you want to read specific tax details about each of these items, visit the IRS website. Any rent payments you receive when you rent out your property are subject to income tax and must be reported on your Income Tax Return.

Qualifying non-residential property owners can refer to the Tax Treatment of Rental Relief Measures in the Rent Waiver Framework for Assessment Year 2022. (for rental income received in 2021)

Best Rental Property Spreadsheet Template For Download

Under the Land Relief Framework, landlords (ie landlords) of qualifying non-residential properties would also have received a cash grant in 2020 and are required to provide rent waivers to eligible tenants.

For more information on income tax reporting, please refer to the Rent Relief Framework – 2021 assessment year report of rental income from people who own property of non-residential properties.

Rental income refers to the total amount of rent and related payments you receive when you rent out your property. This includes:

How To Claim Rental Property On Taxes

The net rental income after deducting any allowable expenses is subject to income tax. It is taxable from the date it is due and payable to the property owner, and not the date of actual receipt.

Big Rental Property Tax Deductions

Property tax is a tax on property. It applies whether the property is owner-occupied, rented or vacant. It is different from Income Tax.

Income tax is a tax on your earnings, including rental income earned from renting out your property.

Your tenant rented your property from October to December 2022. However, he only paid rent for this period in January 2023.

You need to declare the rent from October to December 2022 for the Year of Assessment 2023 as the rent was due to you in 2022.

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The rental income is taxed 100% on the sole owner of the property, even if a third party receives the rent.

Rental income is taxed on all joint owners based on their legal share in the property. It does not matter which party receives the rent or if the owners pay for the property. Loss of rent is also allocated to joint owners, based on their legal share in the property.

Expenses incurred only for the production of rental income and during the rental period can be claimed as a tax deduction.

How To Claim Rental Property On Taxes

To simplify tax submission and reduce the burden of record keeping, an amount of withheld rental expenses calculated based on 15% of the gross rental will be pre-filled in the online tax form . In addition to 15% of the rental costs, the owners can still claim the mortgage interest on the loan taken to buy the rented property. Please keep supporting documents related to mortgage interest for at least 5 years for verification purposes.

How Is Rental Income Taxed? What You Need To Know

Alternatively, property owners can opt to claim the amount of actual rental expenses incurred. Please keep all supporting documents such as tenancy agreements, bank mortgage statements, invoices and receipts for at least 5 years for verification purposes.

From Assessment Year 2022, any expenditure incurred by an owner for the repair, insurance, maintenance or upkeep of a property when it is vacant in any part of a basis period, and any property tax paid on that property for that vacant period can be deducted from the rental income. This is subject to the condition that reasonable efforts have been made to find a new tenant during the vacant period(s) between leases.

Incurred during the lease period (for example, the property tax paid for the year 2021, on the property leased in 2021).*

Cost of renovations, additions, alterations to the property (eg extension of car porch, construction of drains, cementing of walls and floors, installation of window grilles).

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Agent’s commission, advertising, legal fees and stamp duty incurred in obtaining, granting, renewing or extending a lease for first and subsequent tenants are allowed.

A) any lease, or any renewal or extension of a lease, for a term that (excluding any option for renewal or extension of the lease) exceeds 3 years;

B) any acquisition, grant, novation, transfer or assignment of a lease by way of any acquisition, sale, transfer or restructuring of any business; o

How To Claim Rental Property On Taxes

C) a lease under an agreement where the property is sold by, and leased back to, the seller of the property.

How Are Taxes On Rental Property Income Handled?

The agent’s commission, advertising, legal fees and stamp duty for getting the first tenant of an additional property is deductible against the rental income of that property.

Costs for engaging a third party (e.g. property agent/company) to carry out activities such as ensuring that rents are paid promptly, maintenance and upkeep of properties and attending to tenant inquiries and complaints.*

When management fees are paid to a related party (for example, relatives or own company), the owners need to justify that the amount paid is at the market price and proportionate to the services provided.

The relevant expenses incurred on such properties (eg rent, utilities, maintenance paid for the own accommodation / a vacant property) cannot be claimed against the rental income generated by other properties, as the expenses are of a capital and private nature.

The Most Common Rental Property Tax Deduction Mistakes

* From Assessment Year 2022, this includes costs incurred during the vacant period(s) between tenancies (

Provided that reasonable efforts have been made to find a new tenant during the vacant period between tenancies)

You bought Property X in 2020 for your own stay. In 2022, you decided to rent Property X and rented a house (ie Property Y) near your office for the convenience of commuting to and from work.

How To Claim Rental Property On Taxes

The rent paid on Property Y is considered a private expense and is not a deductible expense against the rent received from Property X.

Rental Real Estate Tax Deductions

In September 2021, the property was let for a period of 2 years (from September 2021 to August 2023) to its first tenant, John.

The taxpayer made reasonable efforts (eg, evidence of advertising, engagement of an agent) to find a tenant during the vacant period, but the property was not rented due to unforeseen circumstances (eg, poor market sentiment or the oversupply of housing in the real estate market) .

1. Interest on the housing loan paid for the purchase of the property during the lease period (Sep 2021 to Dec 2021);

3. Costs of securing the first tenant (for example, the agent’s commission, advertising, legal fees and stamp duty paid) before the start of the tenancy.

How Much Tax Do Property Investors Really Pay?

1. Interest on the housing loan paid for the purchase of the property (including the vacant period) (Jan 2022 to Dec 2022);

You leased your non-residential property at a gross rent of $5,000 per month for 10 months (January to October). Then, you allowed your relative to occupy your property rent free. In addition to the $12,000 interest paid on the loan taken out to purchase the property, you incurred other expenses, namely property taxes of $2,400, fire insurance of $180 and maintenance of $3,600. as follows:

If you have more

How To Claim Rental Property On Taxes


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