There are a variety of tax deductions or “write offs” available to your business. Your options vary depending on what region your business operates out of. According to Intuit Turbo Tax, a company can generally deduct the cost of any business expenses incurred that tax year that were necessary to be operational.
Potential opportunities for deductions include travel expenses, training, software, interest, and even insurance.
Property is typically considered an asset that appreciates in value, but the IRS categorizes rental properties as a depreciating asset. This means that unlike other expenses that can be deducted the year they’re incurred, the deductible amount for rental properties can be divided evenly over the life of the property, because of their depreciation in value.
How your business uses vehicles can lend itself to potential tax deductions. If your business has one or more vehicle that is used for business related activities at least 50% of the time, the expenses associated with using that vehicle can be eligible for tax deductions. This can include gas, mileage, and other related maintenance costs.
If an employee or contractor is using their vehicle for work like landscaping and haven’t been monetarily reimbursed for any associated expenses, the costs they incur can also be eligible for deduction in their taxes.
If you own a property management company and purchase a vehicle for business purposes, you may be able to claim depreciation deductions for as long as you are using it.
Regions across North America vary in how they reward “green energy” depending on the local government’s commitments to sustainable energy.
Government efforts to encourage “green” business practices have resulted in tax breaks for businesses that have implemented sustainable methods of operation. Installing solar panels and reducing overall energy consumption helps with corporate sustainability efforts that the government may reward you for. Owners can save up to 30% on their taxes based on their sustainable energy practices.
There are potential benefits for using alternative fuel and hybrid cars based on the make of the car and the state which you’re located. Retrofitting lighting, controls, HVAC, windows and other equipment with alternatives that reduce energy waste by controlling output can also entitle businesses to tax credits and other incentives.
Businesses that purchase subscriptions to SaaS (service as a software) or ERPs may be qualified to write off those costs. If your company uses property management software to support how business is conducted on a regular basis then that software is considered a vital business expense and you can write off some of those costs that year.
Property management is intricate, sometimes having a complete understanding of the tax options that are available can be hard to grasp. Determining what forms need be filled out and when they need to be filed may put understanding potential deductions and credits on low priority. However, leveraging tax incentives can be the key to making it through tax season with the best possible results.