Two-thirds of taxpayers think they spend too much on federal income taxes. Only one out of four think they're getting value for their money. Only two out of two understand how their amounts are calculated well.
How can you avoid these issues? What do you need to do to optimize your tax expenses?
Read on for tips for navigating property tax management.
Watch for Property Tax Assessments and Account for Depreciation
Your property tax assessment will determine how much you pay in taxes. It's split into an assessed value and a tax value.
Review the assessment regularly to make sure it's accurate. Appeal it if you believe it's inaccurate or unfair. You can back up your claim with evidence such as photographs or recent appraisals.
Account for depreciation. The exact amount depends on factors such as the property's age and what it's used for.
Knowing your deduction rate is an important part of your overall tax expense management strategy. It can make you eligible for deductions.
Leverage Exemptions, Abatements, and Deductions
Certain expenses can be written off as deductions, including:
- Property taxes
- Maintenance and repairs
- Property improvements
- Depreciation
- Office supplies related to the business
- Property management fees
There are also other ways to lower your taxable income. You may be eligible for any number of exemptions or abatements such as:
- Senior citizens exemptions
- Veterans exemptions
- Homestead exemptions
- Energy-efficient upgrades
Getting as many of these as you can is essential to tax expense management. The more of them you have, the lower your taxable income will be.
Invest in Property Improvements
It takes money to make money. Investing in certain property improvements is an effective way to maximize tax savings.
Capital improvements are permanent structural changes. This could be an update to the kitchen or basement.
These are effective long-term estate tax solutions because they don't just reduce your taxable income. They also enhance your property's value, increase its lifespan, and allow it to be used differently.
Stay Compliant with Tax Laws
Maintain up-to-date rental property accounting. Keep a record of all your income and expenses. It proves the deductions you're claiming are accurate and legal.
Watch for any changes in the tax laws. New codes may require you to change tax reduction strategies.
Seek Professional Property Tax Management
Hire professional property managers. They'll help you with every part of property management, including budgeting and tax reporting.
They'll help you file accurately every time. They'll find all possible opportunities for property tax optimization, such as getting all the deductions you're eligible for. You also won't have to worry about going outside the current real estate tax law.
Find the Right Property Manager Today
Property tax management is about reducing your taxable income while filing accurately and compliantly. Ensure the accuracy of all property assessments. Account for depreciation. Leverage any deductions, abatements, or exceptions you're available for. Keep accurate records and look for changes in tax laws.
PMI Jacksonville is a full-service property management company. We provide prompt, friendly service in all areas of the process.
We help grow your investment long-term by setting the maximum rent each month. Contact us to start maximizing your profitability today.
