The Basics of Real Estate Part 2

The Basics of Real Estate Part 2

What are tax deductions of owning a rental property?

We not CPAs nor tax attorneys so you should consult with your tax professionals, however below are deductions we used to lower our tax obligation. By the way, we use a CPA to do our taxes, he is worth every penny and the best part is we learn something new every year.

  1. Advertising: “For Rent” signs and/or hiring a real estate agent to advertise online for you.
  2. Auto and Travel: We live far away from our rental properties so this is great deduction for us. If you are driving it is more beneficial to deduct this expense with the mileage option.
  3. Cleaning and Maintenance: These expenses typically occur when you have pest issues and when tenants move out of your property.
  4. Commissions: Paying tenant finder fees to a property manager or real estate agent.
  5. Insurance: Hazard, liability, and if applicable earthquake and flood insurances.
  6. Legal and other professional fees. Eviction proceeding, closing costs, etc…
  7. Management fees: Property management fees. Property managers typical charge 8%-10% of the gross rent.
  8. Mortgage interest: self-explanatory.
  9. Repairs: Clog toilets, leaky pipes, crack windows, etc…
  10. Supplies: lumber, faucets, air filters, etc…
  11. Taxes: Typically property taxes.
  12. Utilities: Typically this expense occurs during renovation and vacancy.
  13. Depreciation: The property can be depreciated over 27.5 years. Why 27.5 years, no normal person would know, it’s just a number studies have shown. The stove, air conditioner, furnace, window blinds, insulation, refrigerator allow to be depreciated over 7 years. The sewer or septic tanks are allowed to be depreciated over 15 years. We plan to replace roof on one of the properties so I am curious how many years you can depreciate a roof, my guess is 15 or 20 years.

Continue reading “The Basics of Real Estate Part 2”


July in Review, Real Estate, Dividend Income, and Side Hustle

July in Review, Real Estate, Dividend Income, and Side Hustle

fireworksAtlanta Trip: Celebrating the 4th

Now that July is coming to an end, one major event that stood out in this month was celebrating the 4th with our family. In the past, the FEN’s family has been traveling to Atlanta to celebrate this holiday with my side of the family, and now has become our annual tradition. Another tradition is to eat as much as humanly as possible while being here. The supermarkets and restaurants are diverse and plentiful, with food deriving from different ethnic groups and nationalities, all one should worry about is the size of their stomach. There are even restaurants that offer fusion cuisines such as Korean tacos, strange, but somehow this combination works. Living in New Orleans, we get tired of deep fried food rather quickly. New Orleans much like other southern cities, would deep fried t-shirts if they are edible. The best part, all this traveling during a major holiday only cost us $22. Yes, round trip flights for two adults, $22. How this was accomplished? Two words, “Travel Hacking”. Parking near the airport cost us $65, so the entire trip cost was only $87, excluding food. God bless the good ol’ U.S. of A!foodie Continue reading “July in Review, Real Estate, Dividend Income, and Side Hustle”

Earn more, Spend Less and Invest!

By Mr. FrugalEnginerds

The Math

The equation of financial independence is simple and straightforward.

Money Earned – Spending = Money Saved/Invested over time = FI

On this blog, we mainly focus on living frugally by reducing unnecessary spending. However, there is a threshold where it’s unhealthy to dip below a certain level as it starts to negatively affect our standard of living, and thus reduce our overall level of happiness.  In Money Can Buy Happiness we discussed the relationship between income and happiness. We learned that the average American family making more than Continue reading “Earn more, Spend Less and Invest!”