Tax Advice for Rental Property Owners - BusinessWeek

While you're not allowed to deduct principal payments on loans, there are a few tactics you can try to reduce your tax liability

My vacation rental business owns 23 properties on which we make over $200,000 in principal payments annually. Since we make $195,000 in annual profit, every year we end up in the hole financially. We take depreciation on the properties, but it doesn't offset our taxes by much. Is there a way to deduct the principal payments we're making on our properties? —D.P., Cartersville, Ga.

No. "You cannot deduct principal payments on loans," says Bill Fleming, a tax partner at PricewaterhouseCoopers. "This is a typical issue with any leveraged investment—especially real estate, since that is nearly always leveraged."


No comments:

The Real Estate Dictionary

The Best resource to Find San Jose California Realtors - Real Estate Agent, home values in my neighborhood, foreclosures, reo, bank owned properties, reo homes, real estate agents, home values, home for sale, area experts and neighborhood
specialists, home search and view san jose california and san francisco bay area new homes, land, luxury homes, houses for sale, condos, duplexes, townhomes, town homes, starter homes, discount, commercial property, san jose market, investment properties, search the local mls, real estate network, CENTURY 21 real estate services, silicon valley real estate, San Jose Real Estate Agent Realor - San Jose Realtor San Jose Homes - Home For sale - MLS listings - CENTURY 21 Alpha Real Estate San Jose California Real estate Values - Almaden Valley - San Jose CA Real Estate Listings. Each Office is independently Owned and Operated. Equal Housing Opportunity. The information contained herein including but not limited to square footage and lot size from one or more sources has not been independently verified by CENTURY 21 Alpha or its agent. Buyer should conduct their own investigation regarding such information.