In almost every country, the government strongly encourages investing in real estate by offering tax credits and deductions. Investors who use these incentives reduce their taxes, freeing up cash to invest and build wealth.
Here are the top ten tax credits and deductions that can help you maximize rental property profits.
1. TAKE THE HOME OFFICE DEDUCTION
Unlike W-2 employees who burn the midnight oil from home, business owners may deduct the expenses associated with having a home office from their taxes. Yet far too many people fail to take this deduction. Work with a CPA who will help you use and document your home office expenses correctly so you don’t miss out.
2. DEDUCT YOUR TRAVEL EXPENSES
Once you’ve established that your primary office is at home, your deductible travel expenses will increase significantly. Whether you’re driving locally to meet with tenants, check on properties, oversee maintenance, or flying across the country to manage a far-flung portfolio and/or search for a new property, business travel is a significant deduction.
3. INCLUDE ALL OF YOUR VEHICLE EXPENSES
This category is a little complex, so it deserves a place on the list separate from travel expenses. If you use your vehicle for rental activities, such as driving to your properties or picking up supplies, you can claim either the standard mileage rate or actual expenses like gas, maintenance and depreciation. Work with your CPA to determine which is better for you.
4. DON’T SKIMP ON PROPERTY MARKETING
Advertising is crucial to attracting tenants. Any money you spend on marketing your rental properties, such as online listings, brochures, etc., is fully deductible.
5. DEDUCT ANY MANAGEMENT FEES
If you hire a property manager to handle day-to-day operations, their fees can be deducted. This also applies to fees paid to attorneys, accountants and other professionals related to your rental business.
6. USE COST SEGREGATION AND BONUS DEPRECIATION
I speak with a lot of real estate investors every year, and I continue to be shocked by how many people avoid a cost segregation analysis because someone told them it would get them flagged for an IRS audit. This is terrible advice (and often a sign the investor needs a new CPA). Cost segregation, coupled with bonus depreciation, is the correct way to depreciate your investment — saving you a ton on taxes.
7. DEDUCT YOUR PASSIVE LOSSES
While no one likes losses, losses on an apartment rental can offset other income, reducing your overall tax bill. Typically, rental real estate losses are considered passive and must offset other passive income. If your only other sources of income are active, don’t throw in the towel on this item. Work with your tax advisor to see how to restructure your active income to create passive income.
8. ADD ELECTRIC VEHICLE CHARGING STATIONS
Governments offer substantial incentives to people willing to help build infrastructure to support switching from gas to electric vehicles. If you qualify for these tax credits, it’s an excellent opportunity to get the government to help pay for an upgrade to your property that will help you appeal to tenants who drive EVs.
9. INSTALL A SOLAR POWER SYSTEM
Like charging stations, solar systems come with great tax incentives right now. The federal investment tax credit for solar systems is 30% through 2032, and bonus depreciation is still available. Use these incentives to get the government to help pay for another property upgrade.
10. HIRE YOUR KIDS
Rental properties need a lot of regular, unskilled maintenance. Hiring your teenage children to handle basic landscaping, snow removal and other tasks can be a great solution. You’ll deduct the expense of the wages you pay them, and they’ll earn money that’s taxed at a lower rate than yours. Who knows? You could inspire your kids with a love of real estate, just like my mom and dad did.
TOM WHEELWRIGHT®, CPA
CEO
WealthAbility
Tax and wealth expert Tom Wheelwright® is a CPA, CEO of WealthAbility®, Rich Dad Advisor, entrepreneur, international speaker, and author of the bestselling books The Win-Win Wealth Strategy and Tax-Free Wealth. Wheelwright is the CPA for Robert Kiyosaki and has spoken on stage on six continents to over 100,000 entrepreneurs, small business owners and investors. He also is the host of two popular podcasts: The WealthAbility® Show with Tom Wheelwright® CPA and The WealthAbility® for CPAs Show.
Having 2,218 new detached and attached listings in a county of 3.3 million people is anemic. There were 4,198 new listings in October, 2019.
But it doesn’t look like we need any more – those on the market aren’t selling like before. In fact, the unsolds are starting to stack up now, which is the #1 fear for sellers:
It’s showing here too:
These are the more typical market pressures we would see in a normalizing market. The sellers are losing some of their pricing power, and buyers think that most of the current offerings just aren’t worth it.
You can get ahead of the curve on the hottest new home design trends by checking out our predictions of which features and design elements will be trending in 2024.
We looked at nearly 300 home features and design styles mentioned in for-sale listing descriptions on Zillow and then identified the keywords showing up more frequently than they did a year ago. From post-pandemic pastimes to nostalgic designs from decades past, Zillow identified the emerging trends of 2024:
The copycat lawsuits are pouring in now, with attorneys from across the country looking to get their piece. The latest, called Batton 2 (other versions were filed previously), is for buyers from the last 27 years:
“All persons who, since December 1, 1996 through the present, purchased in the Indirect Purchaser States residential real estate that was listed on an NAR MLS.” For this class, the plaintiffs are asking for damages under “antitrust, unfair competition, consumer protection, and unjust enrichment laws.”
The class will include millions of people! If NAR goes out of business (which is likely), it won’t change much because we’ll still have state and local associations. We’ll have less lobbying, but lower dues!
All plaintiffs have momentum now, and the lead attorney from the first lawsuit doesn’t just want money. “One of our goals in filing the case is to make sure any changes are brought nationwide,” said Ketchmark. “We’re extremely focused on making sure any change that comes from this is real change.”
But the NAR is taking it lightly, just like they have from the beginning:
“We are currently reviewing the new filing, and it appears to be a copycat lawsuit,” Mantill Williams, NAR’s vice president of communications. “We continue to assert that the practice of listing brokers making offers of compensation to buyer brokers is best for consumers. It gives the greatest number of buyers a chance to afford a home and professional representation, while also giving sellers access to the greatest number of buyers.”
Here’s our corporate viewpoint:
Compass spokesperson Devin Daly Huerta said the company doesn’t comment on pending litigation, but provided comments from the company’s earnings call on Monday, saying the company “will respond accordingly to the complaints filed against us at the appropriate time” and that the company feels “confident that Compass is well-positioned.”
Compass pointed to rule changes at Northwest MLS that made listing broker compensation to buyer brokers optional and didn’t result in any decrease of offers of compensation or the amounts offered. “So we have evidence in a major U.S. market of what this change might look like that gives us confidence,” the company said.
“Secondly, we believe we are positioned well because we have the combination of some of the most productive agents and the only end to end technology platform in our industry. Third, we currently have agents that successfully ask their buyers to sign buyer broker agreements in order to work with them. We are in the process of launching trainings to all of our agents to empower them to successfully get buyer broker agreements signed with their buyers.
“Lastly, we operate largely in the luxury segment, where we think buyers will always want the help of an advisor through their home-buying journey.”
Similar statements from other brokerages are downplaying the impact. Yes, we will probably have better presentations of what realtors do and why we are worth the money, but anyone who thinks that will fix everything will be sorely disappointed. Consumers will be empowered to consider other options.
The only people who think that buyer-agents are needed are the agents. Buyers find homes for sale online, and they are proud about finding them before their agent does. They wonder why they need their own agent, when they can just contact the listing agent. The listing agents will be enouraging those thoughts!
Here’s a paragraph from the red team – the first to publicly mimic my prediction:
But if buyers’ agents become less common, Redfin will prosper in that world too. We run the largest brokerage website in America. We’ve built self-service technology for buyers to set up their own tours and to make offers. We’ll use that technology to market the properties listed by our agents directly to consumers, taking market share from other brokerages. We may open that platform to other listing agents who work with us as partners.
This is an opportunity for major changes to be implemented on how homes are sold, and these lawsuits are the disruption device. Realtors will roll out fancier graphics that tout the status quo, leaving it wide open for new ideas. Zillow and Homes.com have surged ahead of what should have been the dominant search portal, realtor.com, which NAR also screwed up when they sold it to an outside company.
Zillow has been amassing the pieces to build a super app, and create one-stop shopping for homes. If they add an auction component, it will be O-V-E-R for realtors.
Houses are getting bigger overall, but that doesn’t mean a larger house is right for you.
“Fit is super important, and people get complacent and they don’t think about if their home is still fitting them,” says Marni Jameson Carey, a home and lifestyle expert, author of “Downsizing the Family Home: What to Save, What to Let Go,” and president of Power to the Patients, a nonprofit organization.
Here are four signs your home may be bigger than you need or can handle.
There are rooms you haven’t spent time in for weeks.
You haven’t furnished the whole house.
The property taxes are too much for you.
Most of the stuff belongs to people who’ve moved away.
And here are four things you can do about it:
Reach out to a professional.
Stay in a short-term rental for a while.
Consider all your needs.
Don’t just downsize your home.
There Are Rooms You Haven’t Spent Time in for Weeks
A four-bedroom McMansion may have once been perfect for a house full of teenagers and hosting extended family for the holidays, but now all but your own bedroom is a guest room and you no longer host Thanksgiving for the family.
“You’re overheating spaces that don’t need to be heated at all because you’re not using them,” says Eric Stewart, CEO and associate broker of the Eric Stewart Group of Long & Foster Real Estate in the District of Columbia metro area. “I think it’s the slow realization that the house owns you more than you own the house.”
You Haven’t Furnished the Whole House
Whether you don’t need a room or can’t afford to put furniture in it yet, the fact that your furniture choices can’t match the house you bought may be a sign it’s not the right real estate fit.
“Plastic chairs on a patio on an $800,000 house, and you go, ‘What happened here?’” Carey says.
If you’ve lived in the house more than a few months and you’ve left entire rooms bare, ask if you’re ever going to take full advantage of the total square footage you own. If you see it as unlikely, consider “right-sizing” your property to fit with your lifestyle as well as your wallet.
The Property Taxes Are Too Much for You
You can deduct your state and local property taxes up to $10,000 from your itemized federal tax filing, but for many homeowners that still means they’ve got a few thousand dollars to pay without annual relief.
If the limit on property deductions isn’t enough and means you’re financially strapped, you should rethink the home you own. Consider whether the location outweighs your ability to pay other expenses, and look at alternative cities or neighborhoods that might be able to provide the life you desire without the excessive costs currently tied to it.
Most of the Stuff Belongs to People Who’ve Moved Away
A classic empty nester problem is having all your kids’ belongings spanning from birth to college – and even beyond – with no real use for any of it. Trying to get your adult children to decide between keeping their macaroni art from first grade at their own house and letting you toss it can be tough for both sides, but keep in mind that your home shouldn’t be used as a storage unit.
Carey says, when given a certain amount of space, most people will naturally fill it up with belongings. In the case of empty nesters, that space is often filled with memorabilia that ultimately does not provide enough sentimental value to anyone to be kept. Put your foot down and have your kids come by to clean up and take what they would like to keep.
Even if you’d like to stay in your home in the long run, it’s important to regain control of the property when others stop living there. The worst-case scenario is realizing you need a smaller house or need to move to where you can get more care but feel overwhelmed by the task of clearing out the house. “Don’t be there as a default – be there by choice,” Carey says.
The number of sales and percentage of homes that closed over their list price were better last month than they were last October, but that’s not saying much.
The late-summer surge has subsided, and the last two months of 2023 should bring in a couple of hundred more sales without much change to the pricing stats.
A look at the individual sales is more volatile though. This price point used to be 100% over list:
The interest-rate they get is only 1/2% better, but the down-payment requirements are lower – and that’s where the trouble starts. For those looking for some legit doom potential, here ya go!
Did you know that none of the jurors had sold a house before?
It was part of the screening too, and the defense attorneys were so cocky that they didn’t think it would matter. Their witnesses were a smart-aleck NAR CEO on his way out the door, and an elderly gazillionaire. Is anyone surprised we lost?
This is the American legal system, so there will be talk of settlement. Two brokerages already settled before the trial, and the other two would be smart to settle now – and leave the NAR to pay the bill. If NAR has to pay the entire amount, there will be trouble. They only have half of the money.
Given how quick the plaintiffs settled with ReMax and Anywhere (for only $130 million), a settlement could come flying down the pike any minute. Who knows? Are the NAR attorneys seeing the big picture, and crafting a settlement agreement that solves all the problems?
Probably not.
Can we package up all the things that can be manipulated into class-action lawsuits while we are at it?
Dual agency ensures that every buyer and seller in a transaction gets represented by an agent. But just the sound of ‘dual agency’ is nebuous – it sounds like realtors are up to something. There isn’t anything wrong with dual agency – in California, it is legit, legal, and practiced regularly by me and others. We like it!
But as we enter the single-agency era, only one agency/brokerage will be handling the sale. There will be two agents, but they are both employed by the same brokerage.
Today it’s called dual agency – because the broker represents both parties. The agents can give sound advice separately to their clients which qualifies as legitimiate represention, but lawyers could make it sound shady in front of inexperienced jurors.
If there will eventually be the Big Settlement, let’s find a way to include dual agency in it too so we can get on with the future of selling homes.
Going forward? After a settlement that absolves all previous dual agency, we should better describe the choices. In Colorado, there are transaction agents who don’t represent either side, but that sounds like it could cause a smaller commissions. Can we find the in-betweener that makes everyone happy?
As more buyers go direct to the listing agent to avoid paying a buyer-broker fee, they will be assigned a junior agent for assistance. A box needs to be checked here. Currently, you have to call it either single agency where that buyer is officially unrepresented, or call it dual agency.
While the listing agent is fully representing the seller and their best interests, the buyer only gets enough help from the junior-agent to make it to the finish line. Instead of dual agency, it’s more like single+ agency. Call it Agency 1.5.
Later a buyer could claim dual agency was the cause of all his troubles in the world, and sue realtors to get even. Did he get full representaion from his junior-agent that was comparable to the representation provided to the seller by the agent’s boss? It would sound unlikely and beg of another class-action suit.
Are agents going to call it single agency (only one side represented) and hope for the best?
Because it’s more than single agency, but not strong enough to be called dual agency.
Let’s add a third box for when the buyer gets the in-house junior agent: dingle agency.
If we don’t, we’ll be facing more class-action lawsuits shortly.
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A+ thank you
Lisa Tuomi
June 11, 2025
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Many years ago, we purchased a home in Carlsbad, using a realtor that was recommended to us - Jim Klinge. Fast forward to 2025, we recently had the privilege of selling 2 homes in Carlsbad, CA and didn't hesitate to reach out to Jim and Donna Klinge of Klinge Realty Group to guide us through the sales. The transactions were very different, each with its own unique situation, opportunities and challenges. From start to finish, Donna and Jim helped navigate the pre-sale preparation, the listing, showing of the house, buyer negotiations, the final close and all of the paperwork and decisions in between. What stands out with both transactions is the professionalism of Jim and Donna (and their team), wonderful communication (timely, relevant, concise), their deep understanding of market dynamics (setting realistic expectations), their access to top-notch contractors, and last, their ability to guide us across the finish line successfully. We wouldn't hesitate to use Jim and Donna in the future and highly recommend them for anyone looking to buy or sell a property in North San Diego County.
Jerry Meyer
March 28, 2025
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We sold a home with Jim and Donna and from beginning to end they were consummate professionals. Their initial walk through the property resulted in a list of items to be repaired or updated. They supplied a list of vendors and job quotes to do the repairs and updates. We originally wanted to sell ‘as is’ and just get it over with. They gave us a selling price for ‘as is’ and options for doing a few updates/repairs to doing it all with the selling price for each option. We agreed to do all they suggested and we sold for the exact price they predicted. For every dollar spent we got back more than $2 back in the selling price. And they got that price in a rising interest rate environment! Donna and Jim are extremely detailed and guide you through ever aspect of the sale. There were no surprises thanks to their guidance. We couldn’t be more pleased with their representation.
Thank you Donna and Jim,
Jerry and Mary
Heather Quejada
March 27, 2025
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We have known Jim & Donna Klinge for over a dozen years, having met them in Carlsbad where our children went to the same school. As long time North County residents, it was a no- brainer for us to have the Klinges be our eyes and ears for San Diego real estate in general and North County in particular. As my military career caused our family to move all over the country and overseas to Asia, Europe and the Pacific, we trusted Jim and Donna to help keep our house in Carlsbad rented with reliable and respectful tenants for over 10 years.
Naturally, when the time came to sell our beloved Carlsbad home to pursue a rural lifestyle in retirement out of California, we could think of no better team to represent us than Jim and Donna. They immediately went to work to update our house built in 2004 to current-day standards and trends — in 2 short months they transformed it into a literal modern-day masterpiece. We trusted their judgement implicitly and followed 100% of their recommended changes. When our house finally came on the market, there was a blizzard of serious interest, we had multiple offers by the third day and it sold in just 5 days after a frenzied bidding war for 20% above our asking price! The investment we made in upgrades recommended by Jim and Donna yielded a 4-fold return, in the process setting a new high water mark for a house sold in our community.
In our view, there are no better real estate professionals in all of San Diego than Jim and Donna Klinge. Buying or selling, you must run and beg Jim and Donna Klinge to represent you! Our family will never forget Jim, Donna, and their whole team at Compass — we are forever grateful to them.
Lou F
March 27, 2025
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WeI had the pleasure of working with Klinge Realty Group to sell our home in Carmel Valley, and I cannot recommend them highly enough!
Jim and Donna demonstrated exceptional professionalism, offering expert guidance on market conditions and pricing strategy, which resulted in a quick and successful sale.
Communication was prompt and we were well-informed throughout the entire process.
For anyone looking for a dedicated and knowledgeable real estate team, look no further!
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William Sams
March 25, 2025
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Donna and Jim Klinge of Klinge Realty Group have our highest possible recommendation. From Donna and Jim’s first visit to our house through closing their advice and counsel was candid and honest in all dealings. They kept us fully informed throughout the process. The house sold less than three days after listing with a two-week closing. My wife and I have sold several houses during our lives. This was by far the best experience. Klinge Reality is a premium service realtor. You can’t make a better choice for someone to sell your home fast and for top dollar.
Emily Hernandez
December 29, 2024
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Donna and Jim provided exceptional support and professionalism throughout the entire process. We couldn't have been happier with their efforts. They made our house shine, and thanks to their expertise, it sold above the listing price in the very first weekend! Truly a fantastic experience from start to finish.
Jesus Adrian Sahagun
November 11, 2024
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This year has been difficult on our family, mainly due to having to sell our home. Thankfully we knew God had a plan for us and working with the Klinge team was a key part of it. It was an obvious decision to work with them again after such an amazing experience when purchasing the same home we needed to sell. The challenge was, how will we do this in so little time with so much going on? Jim and Donna held our hand every step of the way. Whenever an unexpected issue arose they found and provided a solution. Never once did we feel pressured to make a decision and the Klinges were always reassuring after providing the information that the decision was ours to make. Despite the curve balls, they never panicked and exemplified the “can do” attitude, making us feel optimistic and taken care of. Their expertise and professionalism was superb. But of all the reasons to work with the Klinges, the most impactful and valuable is their compassion and genuine care for their clients. We pray that we can one day purchase our forever home and you better believe that Jim and Donna will be representing us - as long as they will have us of course. Thank you again Klinge team! Your execution, experience, and care are unmatched.
SABIHA PASHA
July 23, 2024
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Jim and Donna were fantastic! Jim understanding my needs, recommending potential places, pointing out the pros and cons of each property was invaluable. Then when the offer was accepted Donna’s organized guidance through the inspections, paperwork etc made the whole process seem effortless.
So grateful that I had them on my side!
Anu Koberg
July 13, 2024
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We first found Jim through his blog at bubbleinfo.com, which really showcased his knowledge of SoCal real estate. Since then we've done three transactions with Jim and Donna, and they are an incredible full service agency, with Jim's deep market insight and Donna's deft contract and project management. We trust them implicitly in their analysis and strategy, which is based on years of experience. They're always available and on top of things, and we strongly recommend them to anyone.
