Did you know that individual investors account for 74.4 percent of rental properties? More people than ever are choosing to invest in a rental property and this may be something you are considering, too.
But why is it an option that encourages so many investors? Investing in a rental property can offer a varied selection of benefits that can convince you to explore an investment yourself. Read on to learn the crucial benefits you can expect when you invest in a rental property.
1. Investing in a Rental Property: Rental Income
Owning a rental property provides you with a passive income source. A passive income is a recurring one that does not require a lot of effort on your part. Rental properties can bring in the supplemental income you need when you have retired or even when you are still in the workforce.
Because the money that comes in through a rental property is taxed differently, you will also be saving money there.
2. Greater Security for the Property
If you have a second home that you do not use or if you have inherited a property and do not want to put it on the market to sell for sentimental reasons, renting it out is a much better idea than leaving it empty. Houses that are not inhabited are less secure. You run the risk of someone vandalizing the property or even squatting in it and maintenance issues can go unnoticed for a long time, making them worse.
3. Property Value Appreciation
One of the most important real estate investing tips is that you can hang on to a rental property until you see that its value has appreciated enough to make its sale the right choice. You will be holding on to the property without having to pay the mortgage because the rental income will take care of that.
4. Tax Benefits
For most people, one of the most crucial benefits of investing in a rental property is the tax deductions. You can deduct operating expenses. Some of the expenses the IRS allows you to deduct are:
- Advertising costs
- Repairs and maintenance
- Property management fees
- Supplies
- Pest control
- Landscaping
- Property taxes
- Certain utilities
- Insurance
Another tax benefit of investing in a rental property is the depreciation deduction. The IRS lets real estate investors depreciate the rental property over a period of 27.5 years. Although things like the roof, appliances, and more do depreciate, the land itself does not.
You can also avoid FICA taxes on income from a rental property. People who are self-employed have to pay FICA or payroll taxes. The money that comes from a rental property is not classified as earned income, however, so FICA does not apply.
Take Charge of Your Investments
Investing in a rental property lets you have full control of your investment while offering you benefits, like tax breaks, which can make a difference in your bottom line. You can make managing this investment even easier when you turn to professional property managers.
At Harrisburg Property Management, we are here to advise you on how to make your investment pay off. Contact us today to speak with an expert!
