A landlord can live in one unit and still receive tax benefits from renting out other units.
When a landlord rents out a home or apartment, he can claim several deductions when filing an income tax return. The landlord does have to report the rent payments as income, but there are many tax deductions available to a landlord that a homeowner who lives in a home cannot claim, such as house depreciation expenses.The landlord only receives tax benefits when the landlord makes the property available to renters.
Loss Deduction
When the landlord actively operates the rental business, she can deduct more than the total amount of rent income as business loss expenses. The landlord must perform management activities to qualify for this deduction, such as interviewing and selecting tenants, advertising the property and hiring and directing property managers and other staff, according to the Internal Revenue Service (IRS).
Repair Costs
A landlord can deduct repair expenses as business costs. This includes the cost to purchase supplies at a hardware store, as well as wages the landlord pays workers to make the repairs. Normal repair costs are the landlord's responsibility, so the landlord has an obligation to pay the repair bills. If the tenant hires a worker to repair damage to the apartment, the landlord may offer to reduce the rent payment by the amount that the tenant paid the repair worker instead of reimbursing the tenant. The landlord can also deduct the tenant's repair bill as a business expense. If the tenant personally fixes up the property instead of paying rent, the landlord can deduct the unpaid rent.
Non-Occupied Property
A landlord receives tax benefits even when no tenant occupies the property. The landlord can still deduct the normal repair and maintenance expenses necessary to keep the property ready for a renter. According to the IRS, the landlord can not count the loss of revenue from an empty apartment as a business expense.
Landlord-Occupied Property
The landlord does not qualify for additional tax benefits when the landlord is occupying the entire property. When a landlord lives at a house for part of the year and then rents it out for the rest of the year, the landlord can proportionally deduct some expenses and may not deduct some other expenses at all. The landlord must rent the house out for more than 15 days a year to claim any landlord-specific deductions, such as repair expenses and depreciation, according to the IRS.
Multiple Units
A landlord can live at a rental property and still receive a tax benefit. If the property includes two units, the landlord must split repair costs and other deductible expenses between the units when reporting income. If the landlord lives in a house and makes certain rooms available to tenants but does not personally use them for more than two weeks a year, the IRS considers these rooms separate rental properties and the landlord can deduct the cost to maintain these rooms without dividing them up.
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