Types of Deductible Interest on Your Investment Property

a family investingOwning one or two investment properties is one of the best methods of boosting your financial independence and working toward economic freedom. However, this comes with many responsibilities, which might be confusing for you and your investment managers. One of these responsibilities is your tax returns.

You can ease this burden by getting a company like Bergan & Company to manage your investment property in Denver and file taxes for you. The company will help you claim several types of deductions and benefits. Here are some of the interest tax deductions for property investments:

Mortgage Interest

Most investors use mortgages to pay for their properties. The IRS allows a tax deduction on the interest that you pay for your mortgage. You can additionally benefit from the deduction of mortgage points as a type of prepaid interest. Interest on HELOC is, unfortunately, no longer tax-deductible.

Interest on Unsecured Property Loans

If you get financing through an unsecured loan for your property, the interest in your loan might also be tax-deductible. This is a tricky area that requires expertise from a seasoned property investor, especially if you used the proceeds for more than a single property or to meet personal obligations. However, with proper accounting, you can benefit from tax deduction on unsecured property loan interests.

Interest on Credit Card Debt for the Property

You might have used a credit card to purchase some appliances for your investment property. Since this debt is paid back over some time, it incurs some interest. With accurate records, you can take advantage of IRS tax deduction for credit card debt interest in property purchases.

Property investment involves more than an exchange of cash and getting constant cash flow. Various unexpected expenses might arise and significantly decrease your profits. With a reputable property investment company to help you benefit from the given tax deductions, you can raise your profit margins considerably.