Tax Planning

Is My Rental Property Tax Deductible?

BY Spectrum Wealth Management | Mar 23, 2023

For many, the prospect of turning their property into a source of rental income is very exciting. However, that excitement can turn to confusion when it comes to taxes. That is where your wealth advisor or other trusted financial professional steps in.

Our flowchart can help give you a better understanding of how taxes play a role in owning a rental property. Using this chart will prepare you to identify certain tax rules that may apply to your situation.

Here, we cover important distinguishing factors and tax concepts relating to owning and renting property, such as:

  • Understanding how personally using rental property may affect its taxation.
  • Recognizing how rental property may be classified based on certain qualifying criteria and being cognizant of how that fits in with your overall tax picture.
  • Identifying the extent to which rental expense deductions and rental income must be reported on tax returns.
  • Being aware of how rental losses may be treated and the effect that can have on your tax plan.

If you have a rental property or are considering purchasing a property to rent, it is vital to discuss the purchase and tax implications with your financial advisor to ensure it aligns with your overall financial plan.

Spectrum Wealth Counsel, doing business as Spectrum Wealth Management, LLC, is an investment adviser registered with the U.S. Securities and Exchange Commission. Registration does not imply a certain level of skill or training. Additional information about Spectrum’s investment advisory services is found in Form ADV Part 2, which is available upon request. The information presented is for educational and illustrative purposes only and does not constitute tax, legal, or investment advice. Tax and legal counsel should be engaged before taking any action. The opinions expressed and material provided are for general information and should not be considered a solicitation for purchasing or selling any security.