Orange County, CA Property Management: Writing Off Losses

Investors carrying mortgages on one or more rental properties may sometimes find themselves owing more on a monthly mortgage payment than they'll receive in that month's rent. This could occur as the result of a vacancy, a discounted rent as part of a move-in special, or a late rent payment, among other reasons. According to Orange County, CA property management specialists, those holding investment properties over decades may sometimes experience a periodic lowering of rents for reasons having to do with the economy, resulting in the same outcome. Fortunately, there are ways to offset these losses on tax returns.

Ways to Offset Losses

If you own more than one investment property, your investments are taken as a whole in determining how much tax you owe. If one property shows positive net income, and another shows a net loss, the amount of the loss can be written off against the gain, reducing the amount you owe. This is a significant benefit to investors owning multiple properties.

For owners of a single property, it's possible, depending on total income, to offset losses in real estate against other income, reducing the total tax burden. Consult a tax specialist to see if you qualify. If you can't claim the loss against the current year's income, it can be carried forward to offset income in future tax years. Figuring in the usual expense deductions and depreciation allowances will increase the size of the loss carried forward even more, further reducing your future tax bill.

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