As we settle into the new year, real estate investors should take key steps to ensure their real estate investments remain in top shape. Completing these tasks early can help you stay organized, avoid penalties, and protect your investments throughout the year.
Compile Tax Documents
As tax season approaches, rental property investors should ensure they have all necessary documentation to maximize deductions and remain compliant with IRS regulations. Keeping accurate records and gathering essential documents early can help streamline the tax filing process and potentially reduce taxable income through allowable deductions. As your property management company, we provide both a year-end statement and a 1099, along with any maintenance bills during the year. If you don’t have a property management company that provides these for you, be sure to compile all necessary documents to avoid missing any deductions. Do you depreciate your rental property? Depreciation can provide significant tax benefits, so it's important to keep track of your assets and updates. Chat with a tax professional if you have questions about any of these items!
Here’s a list of key items you’ll need to complete your income taxes:
- Year-end financial statement summarizing rental income and expenses
- 1099-MISC or 1099-NEC forms for any contractors or vendors paid $600 or more
- Mortgage interest statements (Form 1098)
- Property tax payment records
- Insurance premiums paid for the rental property
- Receipts for repairs, maintenance, and improvements
- Utility bills
- HOA dues and assessments
- Mileage logs for travel related to property management
- Depreciation schedules for assets like appliances, HVAC systems, and renovations
Having these documents ready will make tax preparation smoother and help ensure you take advantage of all available deductions.
Property Tax Payments Overdue
If your property taxes are not escrowed through your mortgage company, they must be paid directly. Ensure your mailing address is updated with the county to receive your tax bill on time and ensure it has been paid. Tax bills are due in November and become delinquent April 1st of the following year.
Annual Association Dues
Most homeowner associations bill annual dues at the start of the year. Ensure your HOA dues are current and that they have your correct mailing address. Late payments may result in fees, rent abatement, or even legal action.
Review Your Insurance Policy
The beginning of the year is a great time to review your insurance policies. With rising costs and market changes, it may be beneficial to shop around for better rates or enhanced coverage. Ensure your policy includes protection for natural disasters and liability coverage to safeguard your investment.
Consider Preventative Maintenance
Regular preventative maintenance is essential to avoiding costly repairs and prolonging the life of your rental property. Schedule routine inspections of HVAC systems, plumbing, and roofing to catch small issues before they turn into major problems. Proactive maintenance not only saves you money but also enhances tenant satisfaction. We recommend scheduling HVAC maintenance in early spring and tackling seasonal tasks such as pressure washing, cleaning gutters, and clearing debris from roofs to keep your property in top condition. Also consider property specific maintenance requirements like cleaning dryer vents that are routed through a ceiling or trimming trees that are too close to the roofline.
Schedule a Yearly Property Inspection
A yearly inspection helps identify potential maintenance concerns before they become major issues. It also helps to ensure you have tenant compliance for the lease agreement and that the tenants understand their responsibilities and are taking care of the property. Also check for commonly overlooked issues like leaks under sinks, wood rot, pest activity, and overall property condition. Ensuring your rental is in good shape can help preserve its value and prevent tenant complaints.
Starting the year with these essential tasks will keep your investment properties running smoothly. If you need assistance from a property management company, contact us, Pensacola’s most trusted property management company. We’re happy to assist!
