In most cases, non-resident landlords must file annual income tax returns. While foreign tax laws are not always easy to comprehend, knowing your own tax obligations and rights can save you a lot of money. But can you reduce your property taxes?
Nobody wants to pay more tax. Tax planning is the key to saving money. In this guide, we’ll look at some of the most important tax-saving strategies for non-resident landlords.
An overseas landlord tax is a money that a tenant pays to the landlord in addition to the rent in order to pay for property taxes, council tax, and other types of local taxes. As an overseas landlord, you should be familiar with this term because it refers to your tenant’s payments. When calculating your income tax rate as an overseas landlord, don’t forget about this payment as it will affect your overall profit margin.
To find out what landlords can deduct.
- Claim All Tax Deductions
If you want to be a tax-efficient landlord, you should claim everything you are entitled to. Consult an accountant or tax advisor about what you can deduct as a landlord expense.
Some countries allow you to deduct repair and maintenance costs from your taxable income.
Note that if your landlord insurance reimburses you for some of these expenses, you must report them as income.
If you claim all of your expenses on your tax return, you will pay less tax on your profit.
Keep all receipts in a safe place. In the event of an audit, these receipts may be required to account for expenses.
Depending on where you file, you may be able to claim tax relief on the following expenses. Discuss with your tax advisor which expenses apply to you. Expenses reduce property taxes.
- Cleaning costs
- Property ad costs
- Home insurance
- Letting agent fees
- Facility fees
- Travel to and from the rental home (only if related to maintenance of the property)
- Advisory fees (legal, accounting)
- Mortgage and bank fees
- Taxes paid
2. Rental Property Depreciation
A rented property can lose value due to wear and tear. Unoccupied rental property may be eligible for depreciation.
3. Use All Tax Bands Available
In some countries, transferring assets between spouses should be tax-free. Paying less tax on rental income is also possible if your spouse pays less. As a landlord, you could save money by transferring assets to your partner.
4. Find Exceptions
Check for real estate tax exemptions to reduce your property taxes. In the some states lower taxes for:
- Disabled people
- Re-Evaluate Your Results
You will be taxed based on the value of your property.
That’s why it’s critical to check the deadline for challenging the value and ensure your home is assessed correctly. Your home’s assessed value isn’t market value. You may need a real estate appraiser or a market estimate agent.
2. Destroy Outhouses
In some countries, your home’s additions may be taxed. Like storage sheds.
However, if your property has extra structures outside the house that you don’t use, consider removing them.
If you sell them, update your property tax card.
A pool, deck, or large shed will increase the value of your home and therefore your taxes.
3. See If You Can Join A Tax Relief Program.
The country where your property is located may offer low-income tax relief. It could be a tax credit or a rebate to help you pay your property taxes.