Renting Out a Property? Here’s How to Keep More of Your Money
So, you’ve decided to rent out a property. Great move. Whether you’re turning your old home into an income stream or expanding your real estate portfolio, there’s real money to be made. But here’s the catch: if you don’t handle your taxes right, you could end up paying way more than you need to or worse, trigger an IRS headache.
Many first-time landlords assume that rental income is just like any other income and that tax software will handle the details. That assumption? It’s costing investors thousands every year.
The good news? With the right strategy, you can legally minimize your tax bill, capture deductions you didn’t know existed, and avoid common mistakes that trip up new landlords. Let’s break it down.
The Mistakes That Cost Landlords Thousands
1. Thinking Your Taxes Stay the Same When You Turn a Home Into a Rental
If you’re renting out a property that was once your primary home, your tax situation changes immediately.
- Your rental income is taxable. Even if tenants pay in cash, you need to report it.
- You need to track depreciation. The second your property becomes a rental, the IRS expects you to start depreciating it but if you don’t do this correctly, you could lose out on tax savings.
- Selling later gets complicated. If you sell a rental after living in it, you may lose your capital gains tax exclusion, unless you plan ahead.
A CPA in Austin, Texas can help structure the transition so you don’t lose out on deductions or get hit with an unexpected tax bill down the road.
2. Missing Out on Hidden Tax Deductions
Most landlords miss thousands in deductions simply because they don’t know what to track. Here are some of the most overlooked write-offs:
- Depreciation – A major tax advantage that lets you deduct the property’s value over time.
- Home office expenses – If you manage your rental business from home, part of your mortgage, internet, and utilities could be deductible.
- Travel & mileage – Driving to check on your rental, meeting with tenants, or making repairs? Those miles are deductible.
- Repairs vs. improvements – Quick fix? Deduct it. Major upgrade? Depreciate it. Get this wrong, and you could be leaving money on the table.
- Professional services – If you hire a small business CPA in Austin, a property manager, or an attorney, those fees are fully deductible.
The bottom line? If you’re relying on DIY tax software, you’re probably missing deductions. A tax advisor in Austin who understands real estate can help you keep more of your hard-earned rental income.
3. Assuming Tax Software Will Catch Everything
You know what tax software does well? Basic filings. You know what it doesn’t do? Plan ahead to save you money.
Most rental property tax mistakes happen because software only looks at last year’s numbers. It doesn’t:
- Identify strategic tax moves like cost segregation or 1031 exchanges.
- Optimize your depreciation schedule to maximize your deductions.
- Ensure you’re structuring rental income correctly for tax efficiency.
That’s where an Austin accounting firm comes in. A real estate-savvy CPA firm in Austin, Texas can make sure you’re not just filing taxes but planning for tax savings.
How to Get Ahead of Rental Property Taxes
If you want to stop overpaying and start keeping more of your rental income, here’s what you need to do:
✔ Work with an expert – A CPA firm in Austin, Texas can help you structure your rental properly from day one.
✔ Track every deductible expense – Travel, depreciation, repairs; if you’re not tracking, you’re losing money.
✔ Plan for the long term – If you’re planning to sell, buy another property, or expand your portfolio, a tax strategy now can save you thousands later.
Renting Out a Property? Let’s Make Sure You’re Set Up for Success.
Owning a rental property comes with major tax benefits but only if you know how to use them. The last thing you want is to realize you overpaid in taxes or made a mistake that leads to an IRS audit.
At Insogna CPA, we help landlords and real estate investors maximize deductions, avoid tax pitfalls, and keep more rental income in their pockets.
Thinking about renting out your property? Let’s make sure you’re set up for success. Book a tax strategy session today...