Property Tax Write-Offs for California Landlords
Property tax advantages for persons who rent property can be very rewarding:
Repairs: Rental properties have to be maintained and all repairs are deductible the year that they are done. When something is broken and has to be replaced, this is a great way actually improve your property while getting a tax write off. Actual improvements also are deductible over their projected economic life (see depreciation below).
Travel: Keep records of your mileage when traveling to rental properties whether local or far away. If you have local properties, you can either deduct for mileage or the wear and tear on your car. For distant properties you can deduct travel as well as the cost of renting a room. Keep all your receipts.
Home Office: For the portion of your residence dedicated to a home office, you can take a deduction. The deduction applies not only to space devoted to office work, but also to a workshop or any other home workspace uses for a rental business. This is true whether the landlord owns or rents their residence.
Depreciation: Landlords can reduce their annual tax bill for personal property and real estate improvements by taking deductions for the property’s economic life. To optimize deductions for personal and real estate, it is best to have a good accountant, particularly if you own a business and/or rental property.
Utilities: Generally a landlord does not pay utilities but if your property is not metered or if you share the property with renters, deduct the renter’s portion of utilities from taxes. Additionally, since you use the phone to conduct business as a business owner and landlord, some of the costs for the phone are deductible.
Interest: Like homeowners, landlords can deduct the interest on their mortgages. Additionally the property, interest on credit cards used to improve rental property and interest on credit cards for goods or services used in a rental activity can be taken off.
Employees and Insurance: The costs related to having employees including wages and health and workers’ compensation insurance are deductible. Additionally premiums for most insurance for rental activity are a write off. This includes fire, theft, and flood insurance for rental property, as well as landlord liability insurance.
Professional Services: When you use the services of a lawyer or accountant or any other professional to assist with rental income, take this off your tax bill.
Property Tax Appeals Process
The Board of Equalization assesses property (personal and real estate) to determine its market value. To appeal an assessment for personal property or real estate, we recommend that you contact the appropriate county to request an explanation of how the assessment was determined. You can use the opportunity to share material facts affecting the value of the property. However, if you are not able to reach an agreement we encourage you to make an appeal.
In most counties an appeal is heard at an administrative hearing before the Board. Because findings of the Board are final, being well prepared for the hearing is in your best interest. The property owner has the burden of proving that the assessor has improperly valued the property.
Paramount Property Tax Appeal specializes in real estate and personal property tax filings. We know how to file and effectively win an appeal in any county. We represent our clients throughout the filing and appeals processes.