Crucial Tax Tips for Landlords, Tip #11

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Make Personal Interest Deductible Using Equity Loan

Interest paid on a mortgage, home equity loan, or credit card related to rental activity is fully deductible in the year that the interest is paid, but any other general credit card interest is never deductible.

For that reason, using an equity loan to fund your purchases may be more beneficial.

Say for example you want to buy a car. If you use your credit card you will not be able to write-off the interest, but if you decided to take out an equity loan to fund the purchase, not only would you qualify for better rates, but you would be able to fully deduct the cost of interest paid towards the car.

In essence, writing off the interest on equity loans is like making credit card interest deductible, especially since it doesn’t matter what the equity loan is used for.

Everyone’s tax situation is different, and this information should not substitute professional advice. Taxpayers should always consult with their tax advisors to consider specific factors that might affect their situation.

For more Tax Tips and FREE Property Management Software for real estate investors, check out TReXGlobal.com.

Did you miss these tax tips?

Home Office Deduction
Use Depreciation to Lower Income
Spread Out Repairs
Utilities That Landlord Pays
Auto Expenses You Can Actually Deduct
Look For Properties While On Vacation
Calculating Gain on Sale of Rental Property
New Property Management Software Makes Tax Prep a Breeze
Sell Property To Yourself

Deduct Losses Even If No Expenses

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Tags: tax+tips, deduct+credit+card+interest, deduct+personal+interest, free+property+management+software, real+estate+forms, tenant+background+checks

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Posted on Monday, February 2nd, 2009 at 10:11 am and is filed under AAOA Forum. You can follow any responses to this entry through the RSS 2.0 feed.

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One Response to “Crucial Tax Tips for Landlords, Tip #11”

AAOA - American Apartment Owners Association » Landlord Tax Tips: Hiring Family Members is a Win-Win says:

February 12, 2009 at 9:17 am

[...] Home Office Deduction Use Depreciation to Lower Income Spread Out Repairs Utilities That Landlord Pays Auto Expenses You Can Actually Deduct Look For Properties While On Vacation Calculating Gain on Sale of Rental Property New Property Management Software Makes Tax Prep a Breeze Sell Property To Yourself Deduct Losses Even If No Expenses Make Personal Interest Deductible Using Equity Loan [...]