10 Tax Deductions for Real Estate Investors

My favorite tax accountant Tom Wheelwright likes to say, “if you’re a real estate investor and you’re paying taxes, then you’re doing something wrong!” One of the top benefits of real estate investing is the enormous overall implication on your tax burden.

We aren’t CPAs, so please consult your own tax advisor. However, as you grow your portfolio, it’s incredibly important that you work with an accountant who understands real estate. Hear Tom Wheelwright’s tips for hiring the right accountant.

Here are ten deductions your tax advisor should be accounting for: 

  1. Interest. This is one of the most important deductions for real estate investors. If you’re using some kind of loan to attain properties, the interest you pay every year is a write-off.
  2. Depreciation. The current tax code allows you to claim depreciation on each property for 27.5 years. Claiming depreciation is a powerful tool for mitigating your overall tax burden. For more on depreciation and how to calculate it, see this blog post!
  3. Repairs. We do repairs on all of our properties in order to make them into great homes for our tenants. And luckily these repairs are deductible in that tax year. Win-win!
  4. Local travel. If you live within driving distance of your rental properties, travel expenses count as business expenses. Keep track of your mileage, and receipts from renting vehicles.
  5. Long-distance travel. As you know, I’m a big proponent of purchasing properties across state lines. Airfare, hotel stays, and team meetings are all business expenses, and therefore are eligible write offs.
  6. Home office. If you have an office in your home used solely for business purposes, you can claim part of your home as a business expense. There are strict stipulations surrounding this one—your office must have a door, and it must be exclusively an office. A guest bedroom/office or home gym/office does not qualify.
  7. Employees. The whole purpose of the tax law is to encourage businesses to stimulate the economy. If you hire contractors or have people on staff to make your business run smoothly, you can write it off! The government wants to incentivize you to continue creating jobs. 
  8. Casualty losses. This isn’t something you want to plan for, but in the event of a disaster, such as a fire or a flood, the IRS allows you to write a portion off as a loss.
  9. Insurance. Most investors think about building insurance costs into their expenses, but forget that insurance costs are a write off at the end of the year! Again, it’s a business expense, and the government loves to incentivize stimulating the economy!
  10. Professional or legal services. Any fees you pay to a property management company, lawyer, or other professional can be written off as business expenses.

If you’re serious about saving on your taxes through real estate, there’s one resource I can’t recommend enough: Tax-Free Wealth by Tom Wheelwright. If you can’t tell, I think Tom is a brilliant accountant! 

My favorite tax accountant Tom Wheelwright likes to say, “if you’re a real estate investor and you’re paying taxes, then you’re doing something wrong!” One of the top benefits of real estate investing is the enormous overall implication on your tax burden. Here are ten deductions your tax advisor should be accounting for if they apply in your situation.