Tax Tips for Rental Property Owners , Part 1

Time for Rental Property Owners to prepare for next year’s income tax return

With the end of the 2016 income tax filing season, it seems a good time to review two tax tips for rental property owners where there is partial personal use or not personal use of an owned dwelling.

This post will address which expenses are deductible. The next post will address the difference between repairs and improvements and how the different ways each can affect your income tax return.

What are deductible rental property expenses?

Certain rental property expenses can be deducted from your rental property income to determine your profit or loss for a given tax year. Some of the expenses you can deduct in the tax year you pay them are:

  • Mortgage interest
  • Real estate taxes
  • Property insurance
  • Utilities
  • Cleaning and maintenance costs
  • Supplies  (For example, garbage bags, brooms and mops used only to maintain the rental property. No fair bringing your broom from home to take care of the rental property)
  • Pest control
  • Lawn care and landscaping
  • Trash
  • Repairs, including the cost of labor
  • Credit and employment checks for tenants
  • Management fees if you use the services of an outside property manager
  • Legal or professional fees
  • Travel expenses (Keep records of automobile mileage, and taxi, train, and bus fees for all of those trips to Home Depot or to your local hardware or plumbing supply stores)
  • Advertising (The cost of placing ads for rental apartments in local papers)
  • Utilities (National Grid, Consolidated Edison, New York City Water and Sewer, and payments made to your oil company.

Why you need a separate checking account for your rental property

Owning a rental property is completely different from owning a one-family home. To make sure your experience as a rental property owner is a profitable one, get a separate checking account which you will use only for all of your rental property income and expenses. This account will accomplish two important tasks:

  1. All income and expenses for the rental property will flow into and from this separate account, making it easier for you to track what you spend to maintain the property and the income you’re receiving. This is easier than trying to remember if a certain Home Depot entry was for the book-case in your living room, or a new ladder for your rental property.
  2. Once all the income and expense information for your rental property is in one place, gathering the information necessary to prepare your income taxes is much simpler.   Since the 75 days of income tax preparation season are not the time to finally try to make sense of your financial life for the past year, I give a small discount to those clients who come in with all of their expenses on one or two pieces of paper.. If I must do client recordkeeping, the client will pay a premium for the extra time and energy I must expend to complete their return.

The costs of maintaining your one-family personal home are not deductible.

It’s important to know how the owners of a one-family dwelling they personally occupy are limited about how certain expenses affect their personal income tax return. With a one-family home, you can only itemize your mortgage interest, and real estate taxes. It is imperative to keep records of any improvements made to the house as this will increase the basis when the house is sold, resulting in a lower possible tax bill.

You can find more about this subject in Publication 527 on the Internal Revenue Services website, https://www.irs.gov/pub/irs-pdf/p527.pdf .

Posted in deductible rental property expenses, Depreciation, Income Tax, Personal Insurance, property insurance, rental property, rental property improvements | Tagged , , , , , , | Comments Off on Tax Tips for Rental Property Owners , Part 1

8 Tips To Save Money On Your Auto Insurance

Ah, as the cool nights of autumn become the, well, the warm days of winter, and holiday joy becomes the pain of looming credit card payments, you, like many others, may begin an annual search of finding ways to save money on everything from the cellular phone bill to food. Let me help with these 8 ways to save money on your auto insurance.

1. Many companies will charge more for an automobile insurance policy if you cannot show evidence of being currently insured for at least one (1) to three (3) years prior to your application. So, even if you don’t own an automobile, consider the purchase of a Non-Owned Automobile Insurance Policy. You can also join an organization like ZipCar for about $19.00 each month, which includes liability coverage limits of $300,000. Either way, you can save thousands of premium dollars.

2. Take a Point and Insurance Reduction Class. You’ll automatically
qualify for a 10% discount on your personal liability, no-fault and collision
coverages. And make sure your children, and anyone else who regularly drives your car (and is hopefully listed on your automobile insurance policy as a driver),
takes the class.

3. If you have children in high school, and they are trying to choose between a college  88 miles away, and another one at least 100 miles away, choose the school at least 100 miles away. As long as both schools offer similar need-based tuition plans, you will save money by sending your offspring just another 10 or so miles away. Why? Many companies offer a “Student Away At School” discount, and depending on the company, you premium will either not increase, or only suffer a small increase.

You child must simply go to school at least 90 miles away from home.

4. If you have high-schoolers on your current family policy, encourage them to maintain at least a “B” average, so you will qualify for the Good Student discount. And they still get to live indoors.

5. Purchase your automobile and home, renter, condo or coop policies
from the same company. You’ll qualify for multi-policy discounts, which can
save you at least 10% on each policy.

6. Before you actually purchase a car, call your agent and ask them to give you the symbol for the vehicles you are considering. One young lady was going to purchase a car with the letters “XL” in the model name. I told her the model with only an “L” was two symbols lower, which would result in much lower comprehensive and collision insurance premiums. The major difference between the two models of the same car? One had sun visors with extensions, and the other did not. So, she purchased the “L” model, ordered the fancier sun visors from the dealership, and installed them herself, saving a ton of money on her auto insurance.

7. Improve your insurance credit score. The higher your insurance
credit score, the lower your premium will be. And do everything you can to
avoid having any of the “Five Deadly Insurance Credit Score Sins” on your credit report in the last five years.

The “Five Deadly Insurance Credit Score Sins”are:

a. Foreclosures

b. Judgments

c. Repossession

d. Bankruptcy, or filed for bankruptcy

e. Liens

Always remember, ‘the higher your insurance credit score, the lower your premium’ and the reverse, ‘ the lower your insurance credit score, the higher your premium.’ Any of the “Five Deadly Insurance Credit Score Sins” can hurt your chances of qualifying for a lower automobile insurance rate.

8. Lastly, whatever you do, never, never, never let your automobile
insurance, or any insurance policy for that matter, lapse due to the
non-payment of premium. This alone will disqualify you for coverage with
many preferred companies for several years.

Eustace L. Greaves, Jr., LUTCF is an independent insurance agent and broker based in Brooklyn, NY. Call him today at 718-783-2722 to make an appointment to check your home, auto, flood, renters, coop, condo, life and disability insurance policies.

You can also reach Eustace by sending an  email to Eustace@insuremeeg.com.

 

Posted in Auto Insurance, Personal Insurance | Tagged , , , , , , , , , , | Comments Off on 8 Tips To Save Money On Your Auto Insurance

Automobile Insurance Quote

Put The Car Behind The Automobile Insurance Quote.

Thinking about calling some insurance agencies for an automobile insurance quote? Looking for better coverage for your dollar, a less-expensive policy, or some combination of both?

Then do yourself and every broker or clerk you speak to a tremendous favor and prepare certain information before you make your first call for an automobile insurance quote.

Basic Information You’ll Need For Your Quote

  1. Your driver license because the broker will need the license number to order your motor vehicle record.  Yes, people do call for an automobile insurance quote and can’t find their driver license. What would they do if the police pulled them over and said “License, insurance card and registration”?
  2. Your date of birth.
  3. Your social security number.
  4. The age you were first licensed. 1
  5. The year you were first licensed. 1
  6. Has you driver license even been suspended or revoked for cause?
  7. Have you ever completed a Defensive Driving course? If so, what was the date you completed the course. 2
  8. The Vehicle Identification Number (s) of any vehicle you want to insure.
  9. Your vehicle’s year, make, and model.
  10. The cost of your vehicle when it was new.
  11. How the car or truck will be driven. In other words, will it be pleasure only, used for a short or a long commute to work, or will it be used in the course of your business?
  12. Your current address. If you haven’t lived at your current address for at least three (3) years, what was you last address, and how long did you live there?
  13. The name, policy number, and length of time you’ve been insured by your current auto insurer, and any other automobile insurance company you’ve been insured by in the last five (5) years.
  14. How many, if any, no-fault losses have you had in the past five (5) years? If any, when did they occur, and how much was paid for each claim? 1
  15. How many moving violations?
  16. How many accidents in the last five (5) years? How many were definitely your fault? 1
  17. When did they occur? 1
  18. How many points on your license? 1

Honesty Counts

Above all else, be honest. Tell the quoting broker or clerk if there are other drivers in your household, whether or not they will driving your car, or own their own cars and carry their own insurance. There are few things worse than being caught in a lie when looking for auto insurance.

For example, I recently tried to work with a young lady who, when our conversation began, confirmed she lived alone. There were no other people in her household.

This young lady then told me she had two (2) vehicles to insure. To insurance agents and brokers this is a sure danger sign, especially for someone who’d never had an automobile insurance policy before. So, I asked her whether she would be driving both vehicles, or would someone else drive the second vehicle. She said her husband would be driving the second vehicle. So, when I asked her if she and her husband lived together, she seemed slightly put off, telling me that of course she, her husband and their children lived together.

I asked why she didn’t provide this information when I first requested it and she admitted that a family member told her not to as this should get her a lower rate.

He must have some driving record. Little wonder why automobile insurance premiums are so high, especially here in Brooklyn and Queens.

Best of luck with your search.

References:

1   All of this information can be found on your driving record, or driving abstract. To avoid a trip to their local DMV office, New York State licensees can go to the New York State Department of Motor Vehicles website, http://dmv.ny.gov.

  1. Click on “Top Online Services” under the heading, “Driver Licenses.”
  2. Click on “Get My Driving Record.”

You can order your abstract either through the mail using the MV-15 form for $10.00, or get it online for the fee of $7.00. You will have to create a “MyDMV” account to this.

Of course,  you can always get a copy of your driver license by simply going to your  local DMV office.

2 Defensive Driving courses provide automobile insurance premium discounts and driver license point reduction which last for three (3) years from the course date.

For 33 years, and since October 20, 1995 when he opened his own financial services agency, Eustace L. Greaves, Jr., LUTCF has enjoyed providing his clients with the personal lines insurance coverages, income tax services, and defensive driving workshops they need to better their financial lives. 

Call him at 718-783-2722, or email him Eustace@insuremeeg.com for a competitive quote for your life, home, flood, disability, renters, coop, condo, long-term care, and automobile insurance, personal income tax preparation services, or the date of his next defensive driving class. 

Posted in auto accidents, Auto Insurance, Personal Insurance, Point and Insurance Reduction Workshops | Tagged , , , | Comments Off on Automobile Insurance Quote