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With the April 17 tax day deadline almost upon us, you should be done or almost done with your return. But just in case, here’s a last minute list of things you may have forgotten, courtesy of Christine Karpinski, author of “How to Rent Vacation Properties by Owner: The Complete Guide to Buy, Manage, Furnish, Rent, Maintain and Advertise Your Vacation Rental Investment.”
Consider all your deductions, not just mortgage, taxes, and mortgage insurance payments, but hurricane/wind/earthquake and flood insurance, liability insurance, refinancing and/or closing fees, homeowner’s association dues, special assessments, travel expenses to attend meetings. Utility bills, phone, cable/satellite TV service, Internet service, housekeeping expenses, repairs, out-of-pocket deductibles for insurance claims, maintenance expenses, including lawn and garden upkeep, holiday gifts and bonuses to workers, cleaning services and supplies, including paper towels, toilet paper and cleaning solutions. Meals while you are in your vacation home on maintenance trips, property management fees and commissions, home office expenses, including computer equipment, furnishings, utility bills, advertising expenses, business cards and other printing costs, website building and hosting expenses, photography, virtual tours, deductions for improvements on your home, furnishings and décor, tools, cameras, computers, cell phones, checking account and credit card account administrative fees, postage for mailing contracts, directions, security deposits, legal fees. Educational expenses, including seminars and books about renting your vacation home! Last but not least—fees for the tax preparation.
Remember you can only deduct the portion of the above that applied to your rental business. And you need to tally up all of your revenue as well. Not just the rent, but cleaning fees, parking fees, fees for the pool or gym, pet fees and any portion of a security deposit you permanently keep.
No one said being a landlord was easy, but it does provide a healthy share of deductions.
BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.