Closing Costs, Property Depreciation | Maximize Real Estate Tax Deductions

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You can maximize your property basis by accounting for closing costs, which will save you more money because you get to deduct more than you already do (assuming you don’t already account for closing costs).

By increasing your depreciable basis, you enable yourself to take larger depreciation deductions, which results in a lower taxable liability (the taxes you owe).

To optimize your property basis, find the Contract Sales Price, which is on Line 101 of your Settlement Statement. You can add items unpaid by the seller (Lines 210-212) but be sure to subtract items paid by the seller in advance (Lines 106-108).

Next you must add Title Charges (Lines 1100-1110), Recording and Transfer Charges (Lines 1200-1205) and Additional Settlement Costs (Lines 1300-1302).

This gives you the maximum depreciable basis for your property. Divide this number by 27.5 (for residential property), and this gives you your yearly depreciation deduction.

This is a blog post for Real Estate Professionals, Investors, Landlord, Property Manager, and Property Management Companies. Closing Costs, Property Depreciation | Maximize Real Estate Tax Deductions is brought to you by SimplifyEm Pay Rent Online and Property Management Software

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