Real estate investing article: Accidental Landlords - Take full advantage of Depreciation Deduction

Article Tips > Real estate investing

Were you one of the millions of Americans who started renting your property? You might be due for a major tax break. According to Stephen Fishman, author of Every Landlord’s Tax Deduction Guide, substantial tax savings may lie in the floor beneath your feet, or even in the shrubs outside your building. You can find these savings by separating your assets and accelerating your depreciation. IRS data shows that 78% of real estate investors do not bother to accelerate their depreciation deductions, and as a result, it is estimated that investors will overpay more than five billion dollars in taxes this year.

Many investors do not identify personal property assets to accelerate depreciation because they are either unaware of how to do so, unable to do it themselves, or cannot afford to have someone else do it. Until recently, asset separation services for accelerated depreciation were only available from private firms for larger investors. Luckily, for small investors, T-ReX Global (http://www.trexglobal.com ) introduced DepreciateEm.com (http://www.depreciateem.com ) as part of an ongoing effort to create simple solutions for busy individuals. Small investors can finally accelerate their depreciation deductions, free!

Say you started renting a property in 2007, and your basis was $200,000. Depreciating the $200,000 using a straight-line method over a period of 27.5 years will give you a depreciation deduction of $36,062 over the first five years. Using an asset separation, you value assets inside the home at $30,000. The property basis of $170,000 can be depreciated over 27.5 years, and the basis of 5-year property assets valued at $30,000 can be depreciated sooner. You will be able to deduct $60,652 instead of $36,062 over the first five years. For the average small real estate owner who pays a 33% federal tax on income, this is a savings of more than $8,000 in income tax. Certainly all small real estate investors should take advantage of this valuable tax saving opportunity.

About the author of Accidental Landlords - Take full advantage of Depreciation Deduction

Cameron Britt works in Community Relations at TReXGlobal.com