Last Updated on October 11, 2024 by Kristina Valcheva
As a non-resident landlord, it is likely you will be required to file an annual income tax return. Maybe you’re asking yourself questions like – how can I reduce my property taxes?
And while it is not always easy to understand foreign tax laws, by having a strong grasp of your tax requirements and entitlements, you can save yourself a lot of money come tax time. But is there any way to lower your property taxes?
No one wants to pay more tax than they have to. And the key to saving money on your tax bill is planning. In this guide, we’re going to take a look at some of the most important tips and tricks any non-resident landlord can deploy to minimise their tax liability. PTI Returns will gladly help you find out what can landlords claim tax relief on.
1. Claim all of your expenses against tax
If you want to be a tax-efficient landlord, you should claim everything that you are entitled to and this will help you reduce your rental income tax. Speak to an accountant or tax advisor about what you can claim for and you will see that landlord expenses quickly add up.
For example, depending on the country in which you own the property, you may be entitled to claim repair and maintenance expenses as a tax deduction.
It’s important to note that if your landlord insurance reimburses you for some of these costs you will have to include this as income on your tax return.
If you claim all of your expenses when you file your tax return, the end result is that less tax will be deducted from your profit.
It’s advisable to store all of your receipts in a safe place. You may need these receipts to account for your expenses, should your return ever be audited.
Depending on the country in which you are filing, you may be able to claim tax relief on the below costs. Be sure to discuss with your tax advisor which expenses are applicable to your situation. If you deduct expenses, you will decrease your property income taxes
- Repairs, maintenance, furniture
- House cleaning expenses
- Utilities – electricity, gas, water, TV & internet
- Property advertisement costs
- Property insurance
- Real estate letting agency fees
- Facility charges
- Travel costs to and from the rental property (only if related to maintenance of the property)
- Advisory fees such as legal and accountancy
- Mortgage interest and bank charges
- Local taxes paid
- And more
Keep in mind that if you took out a mortgage to buy your property, your loan interest is one of the most important expenses you can claim. You can also deduct interest on loans borrowed for improvements and credit card interest for rental property expenditures.
2. Depreciation of rental property
When a property is rented out, it can lose value over time due to wear and tear. If your property is available for rent, even if it is unoccupied you may be entitled to claim for depreciation.
3. Make use of all available tax bands
In some countries, Capital Gains Tax should not be paid when assets are moved between spouses. Paying less tax on rental income is also possible if your spouse has a lower tax bracket than you do. With this in mind, as a landlord, you could save on the tax bill by transferring assets to your partner.
4. Look for exemptions
If you want to decrease your property income taxes, check if you qualify for real estate tax exemptions. For example, in the US, some states lower the tax burden for:
- Seniors
- People with certain disabilities
- Veterans
- Agriculture properties
Depending on the country where your property is located, you will need to check the taxing authority to see if you qualify for certain exemptions. It doesn’t hurt to ask!
5. Double-check your assessment
You are going to be taxed a percentage of the value of your property.
That’s why as soon as you get your assessment, it is vital to check the deadline for challenging the value and make sure your home is evaluated accurately. The assessed value of your home is not what it’s worth on the open market. You may need the assistance of a real estate appraiser or an agent who does market estimates.
Check if the property description is accurate. For example, if it’s listed that you have two full baths when you only have 1 big bath, this can lower your home’s value.
There are multiple factors that can reduce the home’s value and there can be a lot of debate on what’s considered “market value”.
Remember, you have the right to appeal on the country and state level if you do not agree with your assessment. The first step in lowering your tax bill is to lower your assessed value.
6. Remove outbuildings
Some additional structures on your home could be also assessed for taxes in some countries. For example, storage sheds.
That being said, if your property includes a couple of additional structures outside the house, that you don’t really need, consider removing them.
If you get rid of them, be sure to update your property tax card.
Also, don’t build a pool, a deck or a large shed because this will increase the value of your home which will lead to an increase in the taxes you pay.
7. Check if it’s possible to enroll in a tax relief program
The country where your property is located may offer a tax relief program for low-income individuals. This could be a tax credit or a rebate which is intended to cover a portion of your property tax bill. How much you will receive could be depending on your property assessment and your income.
Check the department of taxation in the country where your property is located to find out if there are any relief programs available.
8. Pay your taxes on time and check for discounts for early payments
If you forget about the tax deadline and you file late you could end up paying more in fines and penalties, depending on where you are filing.
A great way to save from taxes is to check if the country where the property is located offers incentives for making early payments. For example, some states in the US like Florida offer a staggering discount if you pay early (up to 4%). So, make sure you check for all the incentives the country provides that could save you money on your property taxes.
9. Get help from PTI Returns
Tax is complicated. But filing your return doesn’t have to be.
Working with a tax expert like Property Tax International (PTI Returns) can save you time, stress and money.
Property Tax International can help you avail of all the deductions and exemptions that you are entitled to.
Our goal is to minimise your tax bill and maximise your profit potential. We will handle all of the tricky tax paperwork, ensure your return is filed on time and guarantee your compliance with the tax authorities.
Why PTI Returns?
- We specialise in property tax and filed over 322,000 tax returns last year
- 20+ years of experience preparing both domestic and international tax returns for property owners
- Multilingual support via phone and email
- We offer a comprehensive worldwide tax return service ensuring our clients are compliant in each relevant tax jurisdiction
- Our team of tax experts can answer any of your international property tax-related questions
Our services are available in the following countries:
