I purchased an owner occupied duplex this past summer-my wife in I live in half and rent out the other half. This upcoming tax season will be the first time that I files taxes with a rental property. Besides the obvious tax deductions, such as repair supplies for the rental unit, mileage to the hardware store, etc, are there some other big deductions I should be aware of when filing? If someone could list out the heavy hitters that would be much appreciated, and maybe throw in a few more exotic deductions, if they exist…thanks.
Check out IRS publication 527. It has more information than can be provided in a post.
You are so smart to have invested in an owner-occupied duplex!
Now you can deduct half of: the water bills, landscaping cost, property taxes, fire and structure insurance, mortgage interest (not principal), PMI or MIP on your loan, etc.
Other expenses can be: bank fees for maintaining your account, newspaper rental ads, courses on becoming a landlord, portion of telephone charges necessary for you to rent out your unit, depreciation on your water heater, stove or refrigerator, depreciation on the rental portion of your building, 1/2 the cost of the lawnmower, rake and snow shovel for maintaining the unit. Cost of the appraisal of the property, portion of loan fees and title insurance, etc. etc.
I recommend a CPA to set up your depreciation schedule and provide a template for your deductions every year. Now the CPA fee will be deductible as well! It is especially important to set up your taxes correctly and professionally the year you put your house into service.
Congratulations on joining the Landlord Club!