One San Francisco-based investor achieved savings of 30 percent this year
IRVINE, Calif., April 18, 2016 – Investors using HomeUnion®, an online real estate investment management firm enabling value investing in residential properties, have reported significant U.S. federal income tax breaks on rental property investments this year. Across the U.S., real estate investors who rent out residential property to tenants – whether remotely or locally – can deduct major portions of their business expenses associated with being landlords, which results in tax savings.
“Most people are aware of the significant tax breaks associated with buying a home, but they may not be aware of the tax breaks they can receive when buying an investment home and putting renters in that home,” explains Don Ganguly, CEO of HomeUnion®. “A number of investors we are working with on the HomeUnion® platform, however, have reported big tax savings when they filed their income tax returns in 2016.”
Yang Guo, a senior data scientist at San Francisco-based Uber, uncovered some major tax breaks this year when filing his income tax return online. In fact, Guo says the deductions he could make by renting out his investment property to tenants were “quite surprising.” He shares, “The general wisdom among most people I’ve talked to is that a rental home does not get interest deducted because it’s not your primary residence. So I entered into my investment thinking the first year would be a big money sink. But that’s not true.
“When I filed my returns online, I discovered that I could expense almost every single line item on the rental portion of my investment,” Guo continues. “In the end, my rental property resulted in tax savings of 30 percent of my total expenses. Thirty percent off of anything is great, but 30 percent off something unexpected is amazing. I actually got money back on my taxes this year, when I thought I was going to be flat.”
A first-time HomeUnion® investor, Guo acquired a three-bedroom, one-bathroom property in Alabama, and plans to purchase more SFRs to diversify his investment portfolio, he adds.
Sue Schoenfeld, an accountant and owner of Superior Accounting & Tax Preparation Services, Inc., with offices in Boca Raton and Delray Beach, Fla., says there are many deductions available to rental property investors in the first year of ownership. “Filing a Schedule E (Form 1040) will usually give you a nice-sized deduction on the front of your tax return, which shows rental income.”
According to Schoenfeld, Schedule E deductions address depreciation and include:
- Mortgage interest
- Real estate taxes
- HOA fees
- Management fees
- Travel to check on the property
For more information about rental property deductions, visit IRS.gov or speak with an accountant or tax specialist.
HomeUnion® is an online real estate investment management firm, bringing value investing to the individual investor in residential properties. Based in Irvine, Calif., it provides all the services needed for individuals to invest remotely in SFR properties. The company uses a combination of data-driven proprietary analytics to incorporate over 120M homes and 200,000 neighborhoods into their database, and then delivers its solutions to an on-the-ground infrastructure that currently serves 21 locations. HomeUnion®’s role spans the lifecycle of the investment transaction: from identifying sound investments; handling all aspects of acquisition; maximizing income; protecting asset value; and selling it when the time comes.