Taxes

Renting out your Miami condo will also influence your taxes in other ways, even if you are not planning to sell your condo. The rental income will be taxed as ordinary income, and it is therefore important that you take advantage of all the possible deductions allowed for landlords. Firstly and foremost, it is imperative that you keep track of all the expenses linked to owning and managing your condo. Examples of such expenses are mortgage interest costs, property taxes, repairing and utility costs. How much of these expenses condo owners are allowed to deduct will naturally depend on how many months out of the year they are renting out their Miami condos.

You will also be eligible for tax deductions for costs directly linked to the fact that you are renting out your Miami condo; such as broker fees to find a suitable tenant, cleaning services and payments to management companies that take care of repairs f you are unable to take care of your condo yourself due being out of town. In some cases the cost of fire and liability insurance will also be deductible, and you should also save all receipts for traveling expenses linked to condo maintenance, and rent collection.

It is also important to remember the so called ‘depreciation deduction’ that you can be eligible for when renting out Miami condos. As a rule of thumb, you will be allowed to divide the fair market value of your Miami condo (at the time your begin renting out the property) by its recovery period. For residential rental property the standard recovery period is 27.5 years. Remember that the market value should not include the cost of land! By doing this simple calculation, you will find out how large your annual depreciation is. If your Miami condo is valued to $200,000 (without the cost of land) you divide that sum with 27.5 and you are then allowed to take a $7273 annual deduction from your rental income. The depreciation deduction will often be large enough to cover the entire rental income when renting out Miami condos. Since many condo owners rent out fully equipped Miami condos, they are also allowed to make depreciation deductions for improvements.

© 2005 Everything Displays, Inc., All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.