By:Richard A. Chapo Own residential rental properties? This article discusses how income from those properties impacts your taxes. What Constitutes Revenue? Generally, rental income is defined as any revenue you receive from the occupancy or use of residential property. Rent, obviously, is included in that revenue. Many owners are surprised to learn revenue also includes rent advancements, expenses paid by a tenant and any security deposits not returned to the tenant. In fact, revenue can also include amounts paid to cancel a lease, even if you had to sue the defendant to get it. Yeah, Yeah, But What Can I Deduct? Tax deductions associated with rental properties are strikingly similar to those found in any business. Technically, you can deduct any expense reasonably necessary to “manage, conserve or maintain” the property. Obvious deductions include mortgage payments, cleaning expenses, insurance premiums, service payments such as landscape maintenance, repairs, maintenance, etc. Overlooked rental property deductions include: 1. Expenses incurred in finding tenants, 2. Commissions paid to third parties that arrange for tenants, 3. Paying your accountant and/or lawyer, 4. Mileage for driving to and from the property [I said, “No more parties!”] 5. Depreciation of the property, 6. Depreciation of items in the property such as washing machines, furniture, etc. Imaginary Rent Deduction A few creative property owners have suggested that they should be able to deduct their customary and standard monthly rent if the property is empty. The argument goes, “If the property is empty, I am not making revenue and should be able to deduct the $1,500 that I am missing out on.” At first glance, this almost makes sense. Sadly, it doesn’t fly from the perspective of the IRS. Since you are not receiving revenues, your total revenues for the year will be reduced by the loss rent. You can’t double dip by deducting the $1,500 from the already reduced yearly revenues. The only things you can deduct are the expenses you incur during this period, and only for so long as you are actively trying to rent the place. Rental properties are a great investment. Even more so if you stay on top of your taxes. Article Source: http://www.dailynewarticles.com Richard Chapo is CEO of www.businesstaxrecovery.com - Obtaining tax refunds for small businesses by finding overlooked tax deductions and credits through a free tax return review. More Articles from Taxes Category: What Is A Standard Tax Deduction? What Is An LLC Tax Deduction? Decoding the IRS Dependent Rules! How Do I Know When to Claim a Dependent? Small Business Tax Deductions - Top 5 Tax Planning - What Filing Choices Are There? A Simple Introduction To Filing Electronic Taxes What Would It Mean To Pass The FairTax Plan? New Laws on Donating a Car Why Our Political Leaders Should Embrace the Fair Tax Plan. Income Tax Software - The Best Ones On The Market It's a Taxing Time of Year 1099-MISC Forms For Independent Contractors for 2005 Getting The Biggest Benefit From Tax Help Getting A Tax Break With Your Hybrid Vehicle Home Office Tax Expenses