Homeowners who rent out their property for at least 15 days a year can likely claim bigger deductions under the new tax law, The Wall Street Journal reports. While the IRS and Treasury Department have yet to issue final regulations, there appear to be three benefits for short-term landlords. Legal writer Stephen Fishman provides this first example:
Let’s say you pay $1,000 a month in property tax ($12,000 a year) on a home. Under the new rule, if you live in the home all year, you’re only entitled to a $10,000 deduction. But say you rent it out for three months. You can deduct 25% of your property tax, or $3,000, on Schedule E for rental deductions and income. You can then deduct the other $9,000 you pay in property taxes on Schedule A for itemized deductions.
Second, while the tax law lowers the mortgage interest deduction to $750,000, a short-term landlord can deduct mortgage interest without limitation, WSJ reports. Third, the new law makes it easier for landlords to deduct the cost of furniture, appliances, and other personal property used by renters.
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