How to Form a Tax Strategy to Reduce Rental Property Tax Burden

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For many rental property investors it feels like the money you pay toward taxes completely cancels out any profit that you make. One of the best ways to prevent exorbitant taxes on your rental property is to form a tax strategy as soon as you sign a lease for your rental property.
As part of your tax strategy it is important that you understand the difference between a passive and a non-passive landlord. If you are gainfully employed and using your rental property to supplement your income, you are considered a passive landlord. One the other hand, if you use your rental properties as your main source of income, you are considered a non-passive landlord. You may wonder how knowing what type of landlord you are can change your tax strategy. Understanding the way that you earn money from your property can entitle you to specific deductions.
For example, if you are a non-passive landlord, you can deduct all of your losses. If you go for a time without renters or have damage to your property, you can deduct all of those expenses from your taxable income.
On the other hand, if you are a passive landlord, you can only deduct up to $25,000 of your losses each year. The good news is that you can carry over those losses into the next year.
Another tax strategy for rental properties is to claim repair costs. Part of being a landlord involves upkeep and repair of a property. If you keep precise documents of repairs and their costs as part of your tax strategy, you will be able to include repair costs as losses.
In the end, a good tax strategy for a rental property includes recording all of your losses so that you only pay taxes on your actual gain.

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As seen in Forbes Magazine, Karla Dennis is an expert tax and business strategist. As an enrolled agent, Karla is licensed to represent taxpayers in all 50 states. She holds a Masters in Taxation and Business Development and is the author of two books, Tax Storm and Against the Odds.


Karla, CEO of consultancy firm Karla Dennis And Associates, Inc.™, has saved her clients thousands of dollars and has been featured in various media outlets such as Forbes, MSNBC, KTLA, Yahoo! Finance, and SmartMoney, marking her as the ultimate tax expert.


As of 2014, Karla became the new host on the “Mind Your Business” radio show, KTLK AM 1150, sharing her financial and business knowledge with the greater Orange County and Los Angeles areas. As a supporter of women’s rights and issues, Karla is part of the Women Network, an organization built to educate and mentor women. In addition, Karla is the radio host for Women Network Radio, a show that aims to uplift and empower women of all walks of life.

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