Tax strategies for investment property and business expenses
The tax season is undoubtedly a stressful time for most of us. That is why we always hear advices from the experts to start planning ahead of the taxation deadlines to avoid any hassle. Early preparations can also help assure that we take possible advantages of all possible tax deductions that we can avail of.
Are you aware that there are possible tax deductions from investments in properties? Of course, it is a common knowledge that those deductions abound for business owners as well. Here are simple tips that can be of guidance for all us prior to the tax season for the next year and for the coming years to come.
Tax deductions on property ownership:
We can surely rave from the fact that during a typical tax season, our house may not just be a home but also a source of many tax deduction possibilities. Itemised deductions that are home-related can be added to standard tax deductions to save us more money when paying taxes.
So what are the items related to our home-ownership that can be eligible for any tax deduction? First, for newly purchased properties, check for any tax amount that you may have already reimbursed to the seller. The tax amounts may have already been paid by the seller prior to your acquisition.
Second, claim tax deductions from the mortgage interest. There are several limitations based on the new taxation policy, but there will still be huge tax savings. If you have paid private mortgage insurance or PMI from 2006 to 2011, you may qualify for such a deduction but only if your adjusted gross annual income ranges from $100,000 to $109,000.
Tax deductions for business:
In general, it helps to always keep all receipts from business expenses. You should do so even if you are not so sure whether or not any tax deduction can be obtained. It is also a must to determine your business profits or losses. Of course, tax deductions only apply on profits. This way, if a loss was incurred, additional business-related expenses may possibly add up to the costs.
For small businesses, funding through personal loans or the use of personal credit cards can be tax deductible. Take note that such loans can be under your personal name, but still, those can qualify for possible business tax deductions.
There is a new rule on depreciation. Small businesses can take advantage of depreciation deduction for any asset that is worth up to $6,500. There is no need to wait for depreciation over time. This threshold was raised from just a value limit of just $1,000 in the previous years.
Of course, there is no need to forget tax debts. Most businesses may not want to even acknowledge those. But it may be advantageous to write those off as bad debts before a set deadline for the year to possibly obtain a tax deduction from those.