Rentec Direct - Property Management Software

I'm somewhat confused by our government's choices in stimulus money.  The last homebuyer $8000 tax credit was for first time home-buyers only.  Obviously any property investor is out of luck on this one.   This new one is a $6500 for a repeat home buyer, as long as it is for their primary residence.  Again, unless your willing to move, and your current primary residence would make a good rental, this procludes property investors.

Meanwhile..

• A huge quantity of vacant forclosed homes continue to sit on the market.  Quite literally rotting.
• Some banks are renting out these foreclosed homes, driving down the rental market.
• Contractors who still hold onto some of these developments do the same, rent them since they aren't selling, further bringing down rental rates.
• The dollar continues to inflate at all time highs (the other tax)

So I do get that Uncle Sam wants to prioritize first time homebuyers to get people into their own home.  That is great.  Now homeowners that want to upgrade are incented, great too!  But the point is to get these vacant homes off the market and in turn get property values back on their way up.  I would submit that many property investors who buy homes to rent are far better equipped than most first time home buyers to complete property purchases.  The $8000 or $6500 cash incentive would go a LONG ways in making a huge number of properties currently on the market profitable when converted to a rental.  I believe if this credit were opened up to investors as well, housing inventory would go down at least 100% faster, for the betterment of all.

So why does the government exclude property investors?  I've been told it's because it was property investors that caused a lot of the problem in the first place.  And to correct that, I was told it was actually builders who purchased investment loans to overbuild in so many areas and then of course they defaulted on their investment/building loans.  The banks grouped all the builders as "investors", and said that was the cause of their collapse.  Yet actual property investors who do things right are paying their monthly mortgage payment like clockwork and definitely are NOT the problem that caused the banks lending issues.

So all I can really say is that I don't understand what our government is thinking, but their line of thinking is not aimed to fix the problem is all I can tell.  I think we're in for continued inflation and continued real-estate devaluation, and despite a few sporadic mentions of housing pricing improving here and there, overall I don't believe it's happening.  Any increases in home values are FAR less than the 300% inflation our dollar has seen over the past 6 years.  Point of fact, compared to 2003, $1.00 today is worth about $0.30.

--- about the author ---

Rentec Direct provides property management software free to landlords and property managers and it includes full deduction and depreciation tracking and reporting. Because of the importance of thorough screening for prospective tenants, we have integrated tenant screening directly into the software so in just a few clicks a complete and comprehensive background check including previous evictions can be done on any new tenants.

This comes as routine for many home owners and landlords, but I find when I ask various other landlords I know they often aren't taking all their deductions.  Usually in the form of depreciable improvements, or in wild cases, depreciation on the house itself!

There's a book out there I got off Amazon a while back called 'Every Landlord's Tax Deduction Guide'.  It has a lot of great ideas and is well worth it if your a landlord needing any assistance figuring out what is deductable, what is depreciable, and what might be illegal to decuct on your taxes.  Granted my version is from 2007 and I bet there is a newer one; however, most of the items are still very current.  Here's some examples to my fellow landlords to pay attention to.

Common Depreciations - Depreciable items are items which Uncle Sam doesn't let you take up front.  You get to take a tax break over the improvement's useful life which can be anywhere from 2-30 years.

1. Most investment property owners depreciate the value of the dwelling itself.  This is usually a very large depreciable deduction.  Using the 80/20 rule (80% dwelling, 20% land) is a common way to factor it, or using the local assessed values for percentages are another way.  The typical investor gets to depreciate the dwelling's cost over 27.5 years.

2. New Roof, Add-on, remodel, deck, garage, outbuilding.  All depreciable over 27.5 years.

3. Landscaping, plants, fences, sidewalks, driveways, or swimming pools.  Depreciable over 15 years.

4. Carpeting, vinyl and non-permanent flooring, drapes & blindes.  Depreciable over 7 years.

Common Deductions

1. Repairs - If you are repairing part of the dwelling, land, or an improvement (even if your already depreciation the improvement), repairs to these items are typically always deductable during the year they are done.

2. Operating Expenses - So long as the expense was ordinary and necessary it typically is deductable.  This might include: advertising, auto and travel, cleaning, maintenance, commissions, insurance, professional fees, management fees, and mortgage interest.  Keep receipts!

Trust me, aside the massive self-inflicted national debt, Uncle Sam has plenty of money and he doesn't need any handouts.  When you are managing your own properties, or managing for someone else, please keep all that you should and don't let Uncle Sam take anything more than they are due.  Every state has different rules, and tax law changes all the time.  Do consult with a tax professional to make sure these deductions apply to you.

Keeping track of all this is usually the problem most landlords face.  If you have a property management company handle your affairs, they probably provide you a report at then end of the year with most common deductions itemized.  It's still up to you to keep track of all improvements and depreciable items.  If you manage your own property, use a property management software package which has deducation and depreciation tracking support.

--- about the author ---

Rentec Direct provides property management software free to landlords and property managers and it includes full deducation and depreciation tracking and reporting. Because of the importance of thorough screening for prospective tenants, we have integrated tenant screening directly into the software so in just a few clicks a complete and comprehensive background check including previous evictions can be done on any new tenants.