You decided to use your home as a rental property. Great! Time to shift your financial thought process about that property from being a home where expenses are just that, expenses, to one where those expenses aren’t personal any longer. What do we mean by that? Read on to find out.
First, your rental property is a separate “business.”
Think about it. You have deductions for your personal expenses. Things like health care and medical expenses, real estate property taxes, mortgage interest, childcare and so on. Your rental property is no different.
You will need to keep track of things like improvements made to the property, utilities paid, real estate taxes and mortgage interest paid and property management fees. The IRS has guidelines and your accountant can be a big help in what is and isn’t deductible.
Long term benefits
Next, the money you spend on your rental property will give the property, and you, long term benefits. This is because like when it is a home, improving and keeping your property in good repair will increase the value of the property.
So as with your home, keep valuation in mind when making upgrades to the property. Also keep that in mind when screening tenants. One tenant that trashes your property can decrease the value considerably while one that cares for it like it was their own will help you maintain and increase the value.
It’s a business
Remember, having a rental property means it’s no longer about you. Think of it as your home and the emotional attachment will cloud your financial judgment. Think of it as a business and you will benefit now and in the future.