There are many benefits to consider when thinking about being a landlord in Anchorage; from additional income to tax benefits to being your own boss. So if you have a property that you are considering renting instead of selling or if you are contemplating getting into the rental business here are some of the upsides to owning rental property.
Benefit #1: Having an additional revenue stream
You know that adage about not having all of your eggs in one basket? Well having rental property can be an excellent way to implement that in your life. In addition to your regular 9-5 job, you can get the income from your rental properties. Your income is the money left over after to have paid any expenses on your property. Expenses can include the mortgage on the property, utility bills (if the renters aren’t paying them), and any money you choose to set aside for maintenance and repairs. If a property manager is managing the property for you, they will take all of this out of the rent they collect and what you will get is pure income.
Benefit #2: Great tax advantages
There are a lot of deductions that are available for you and they will help offset the income you get from the property as well as help with the taxes you have to pay on your regular income. Here are some of the most common ones you can claim.
- Depreciation: As a residential landlord, the purchase price of your rental property can be deducted from your taxes for 27.5 years after you buy the property.
- Interest: Typically this will be your biggest deduction because it includes the interest on the mortgage you took out to purchase or improve the property. You can also include interest on any credit cards you might use to maintain the property.
- Home office: If you are managing the property yourself and have a home office area you use then a percentage of your home’s utilities, mortgage, insurance and more becomes a tax write off. There are specific IRS requirements that must be met, however.
- Repairs: Any of the typical repairs you pay for as the landlord like repainting, plumbing, replacing windows, new flooring, and more can be fully deducted from your taxes in the year you paid for them.
Benefit #3: Being your own boss
While you may start with just one property to supplement your 9-5 income, it would be typical for you to end up investing in multiple properties as time goes on. Many people look at it as a way to have an early retirement as they add additional properties and get to the point where some are paid off.
Benefit #4: Solid investment
Property is a lower risk investment than most, and according to recent history, your return on investing in real estate will stay consistent. You don’t have to worry about the bottom of the stock market falling out from under you. Additionally, real estate most commonly appreciates in value, so it is a dependable way to increase your net worth.
There is a lot more to consider than these four benefits, but we hope this has begun to help you decide which direction to go. If you want more information or are interested in how we help landlords keep it simple, feel free to give us a call at 907-268-4779.