Why This HomeUnion Investor Is Happy With Their Tax Return

Unhappy With Your Tax Returns? Not This HomeUnion® Investor

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Most people are familiar with the federal income tax breaks the Internal Revenue Service gives to homebuyers, but they may not be aware of the tax savings they receive as landlords. But one investor on HomeUnion®’s platform recently discovered that he could achieve significant – and surprising – tax breaks by purchasing an investment home and renting it out to tenants.

Yang Guo, a senior data scientist at San Francisco-based Uber, saved nearly one-third of the total business expenses related to renting out a three-bedroom/one-bathroom single-family home in Alabama on HomeUnion®.com when he filed his income tax returns. “Most people I’ve talked to think that a rental home doesn’t get interest deducted because it’s not your primary residence. So I entered into my investment with HomeUnion® thinking that the first year would be a big money sink, but that’s not true.”Yang

“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.”

Tax Deductions

There are several deductions available to landlords in the first year of property ownership that most people find surprising, confirms Sue Schoenfeld, an accountant and owner of Florida-based Superior Accounting & Tax Preparation Services, Inc. Schoenfeld advises her clients to file a Schedule E (Form 1040) to get a “nice-sized deduction on the front of your tax return, which shows rental income.”

According to Schoenfeld, Schedule E deductions include:

  • Mortgage interest
  • Real estate taxes
  • Repairs
  • Gardening
  • Supplies
  • Insurance
  • HOA fees
  • Management fees
  • Travel to check on the property

Landlords can also deduct wages and salaries for employees, such as the cost of paying property managers, grounds maintenance workers and independent contractors. The wages of architects, landscapers, gardeners, roofers, carpet-layers and painters are examples of independent contracting work that can be deducted. For HomeUnion® investors, you can also deduct the Asset Management fee collected by HomeUnion®.

For more information about the items you can deduct as a landlord, visit IRS.gov or speak with an accountant or tax specialist.

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