Writing Off Expenses as a Landlord

Do you ever have one of those "duh!" moments when you want to smack yourself in the forehead? Yeah, I just had one of those last night.

It was shortly after depositing my tenant's check in to the bank. I started thinking about how being a landlord involves a lot of semi-hidden costs. For example, the apartment that I rent is in my house. It is one half of the second floor with its own private entrance. However, it does not have its own private heat or a/c. I love reading frugal tips on how to save money and one of the ones you read over and over again is to change the temps on your thermostat - using more ceiling fans in the summer and more sweaters in the winter. I can't take advantage of that though. When I first moved into the house I tried bumping up the temp. a bit and almost immediately my tenant noticed that the a/c wasn't as cold and let me know. So, in the middle of July my downstairs was freezing in order to try to cool her upstairs apartment because my ex promised that it would always be "comfortable" and he was the one that made the initial agreement with her. I also have a higher trash bill because I need a bin for two, higher water bills and so on.

Then it hit me - I can write a portion of these expenses off! I don't know why I didn't think of it before. Okay, I actually know why. When I was married, my husband handled all of that. He was the primary landlord and bill payer. My job was to show the apartment to prospective tenants when he couldn't and to help prep the apartment between leases. He had his own rental unit when we moved in together and then when we bought this house, he handled all of those items. I know that we occasionally talked about the tax benefits, but not very often, so it just wasn't on my mind when I became the landlord.

Then I thought of a few other expenses that I should be tracking...

It seems obvious now, but I didn't even think about saving receipts when I made repairs to her apartment. In July I spent about $120 on the freezer door seal and fixing her toilet. Honestly, I am not one for keeping receipts; once something is doing what it is supposed to and it accounted for in my bank account and budget, I dispose of them. So I quickly called Catie, a friend who does a lot of freelance work and who is an armchair real estate developer. (She'll have a string of apartment complexes yet.) We chatted about it and she gave some great suggestions. The good news is that I actually saved the freeze seal receipt ($90.) Why? Because I wanted it when I wrote my post about doing the repair work and I just left it in my desk drawer - yay! Once again this blog helps in unexpected ways.

So, now I am going to start a special file for all apartment related expenses. It will include items that effect the whole house, and a portion of which goes towards the apartment (like heat) and specific items that I purchase to make repairs or upgrades to the apartment itself.

I can't believe I forgot about all of that, but the good news is I only took over the home in July, so we aren't talking about a lot of expenses before I caught my error! I'm just glad I didn't think of this in April!


(Land)Lordy, here's some good reading - (Yes. I actually made that pun.)

This was great! Check out this article on eHow: How to Get Landlord Tax Breaks (I don't know if that last point will apply to me, but it something to keep in mind!)

Another good one from SmartMoney - So You Want to Be a Landlord (The Tax Guy) In it he mentioned lawn care! I know I still have the receipt for my lawnmower!

NOLO - Top Ten Tax Deductions For Landlords



Photo by turkeychik