The Importance of Residential Tenant Screening & Commercial Tenant Screening

Some think that tenant screening services are unnecessary. They believe that it is a waste of money when you can verify the information yourself by calling references. However, the fact is that with regard to an investment, everyone must make smart choices. The only way that one can make a smart decision is based upon accurate information. Unfortunately, people will lie in order to get what they want. It is these people that are willing to do anything that are the most dangerous to your investment. Employment screening services ensure that you are adding the right person to your team, and confirm based on their history that your employees and business are not at risk by this person. Tenant screenings confirm that the renter is credible and is consistent on paying their bills.

Life Without Background Checks

When it comes to not using tenant screening services, there are countless stories of homeowners that rented to someone that then skipped out on their monthly rent payment. One example is from the state of Georgia. The person renting the home skipped out of town while still owing two months of rent. Calls, emails and texts all were not returned by that person. All the homeowner could do was file with the court, and look into the potential of garnishing wages. The only problem is that he did not know where the renter was any longer. Tenant checks could have pulled up any history of this type of action, and prevented the homeowner from losing out on money.

Not using employment screening services can be even more damaging as it involves the reputation of a business being on the line. There are several stories where businesses that work with children had unknowingly hired a convicted child molester. The reputation of the business can be permanently scarred by one bad decision. Employment background checks can prevent businesses from making poor hiring decisions.

Types Of Screenings

There are multiple facets to employment screenings. The first checks for a criminal background. This is important to the safety of other employees, yourself and to your business. If an employee has previously been convicted of embezzlement then it would not be a good decision to hire that person for an accounting position. The employment background checks also evaluates the work history of the candidate to verify that the information provided on the resume actually matches the recorded work history of the individual.

Tenant screening services check the criminal background of the renter as well. This is extremely important if the person has a history of drug abuse. If illegal drugs are made or distributed on the property, the government has the right to confiscate that property. In turn, you could lose your investment because of a renter. On the other had it also checks the credit history of the renter to ensure that they do not have a record of skipping out on their bills.

Protect Yourself From Risk

Regardless of your situation, you will want to employ either tenant or employment screening services to ensure that you are protected. The best way to protect yourself from risk is to make sure that the employment or tenant screening services you use meet the Fair Credit Reporting Act standards set by the federal government. Protecting yourself and your business is important, start by getting background checks today.

Article Source: http://EzineArticles.com/?expert=Chris_A._Harmen

 

Top 10 Tax Deductions for Landlords

Every year, millions of landlords pay more taxes on their rental income than they have to. Why? Because they fail to take advantage of all the tax deductions available for owners of rental property. Rental real estate provides more tax benefits than almost any other investment.

Often, these benefits make the difference between losing money and earning a profit on a rental property. Here are the top ten tax deductions for owners of small residential rental property.

1. Interest

Interest is often a landlord’s single biggest deductible expense. Common examples of interest that landlords can deduct include mortgage interest payments on loans used to acquire or improve rental property and interest on credit cards for goods or services used in a rental activity.

2. Depreciation

The actual cost of a house, apartment building, or other rental property is not fully deductible in the year in which you pay for it. Instead, landlords get back the cost of real estate through depreciation. This involves deducting a portion of the cost of the property over several years.

3. Repairs

The cost of repairs to rental property (provided the repairs are ordinary, necessary, and reasonable in amount) are fully deductible in the year in which they are incurred. Good examples of deductible repairs include repainting, fixing gutters or floors, fixing leaks, plastering, and replacing broken windows.

4. Local Travel

Landlords are entitled to a tax deduction whenever they drive anywhere for their rental activity. For example, when you drive to your rental building to deal with a tenant complaint or go to the hardware store to purchase a part for a repair, you can deduct your travel expenses.

If you drive a car, SUV, van, pickup, or panel truck for your rental activity (as most landlords do), you have two options for deducting your vehicle expenses. You can:

  • deduct your actual expenses (gasoline, upkeep, repairs), or
  • use the standard mileage rate (55 cents per mile for 2009; 58.5 cents per mile for July 1, 2008 through December 31, 2008 and 50.5 cents per mile from January 1, 2008 through June 30, 2008). To qualify for the standard mileage rate, you must use the standard mileage method the first year you use a car for your business activity. Moreover, you can’t use the standard mileage rate if you have claimed accelerated depreciation deductions in prior years, or have taken a Section 179 deduction for the vehicle.

5. Long Distance Travel

If you travel overnight for your rental activity, you can deduct your airfare, hotel bills, meals, and other expenses. If you plan your trip carefully, you can even mix landlord business with pleasure and still take a deduction.

However, IRS auditors closely scrutinize deductions for overnight travel — and many taxpayers get caught claiming these deductions without proper records to back them up. To stay within the law (and avoid unwanted attention from the IRS), you need to properly document your long distance travel expenses.

6. Home Office

Provided they meet certain minimal requirements, landlords may deduct their home office expenses from their taxable income. This deduction applies not only to space devoted to office work, but also to a workshop or any other home workspace you use for your rental business. This is true whether you own your home or apartment or are a renter.

For the ins and outs on taking the home office deduction, see Home Business Tax Deductions: Keep What You Earnor Every Landlord’s Tax Deduction Guide, both by Stephen Fishman (Nolo).

7. Employees and Independent Contractors

Whenever you hire anyone to perform services for your rental activity, you can deduct their wages as a rental business expense. This is so whether the worker is an employee (for example, a resident manager) or an independent contractor (for example, a repair person).

8. Casualty and Theft Losses

If your rental property is damaged or destroyed from a sudden event like a fire or flood, you may be able to obtain a tax deduction for all or part of your loss. These types of losses are called casualty losses. You usually won’t be able to deduct the entire cost of property damaged or destroyed by a casualty. How much you may deduct depends on how much of your property was destroyed and whether the loss was covered by insurance.

9. Insurance

You can deduct the premiums you pay for almost any insurance for your rental activity. This includes fire, theft, and flood insurance for rental property, as well as landlord liability insurance. And if you have employees, you can deduct the cost of their health and workers’ compensation insurance.

10. Legal and Professional Services

Finally, you can deduct fees that you pay to attorneys, accountants, property management companies, real estate investment advisors, and other professionals. You can deduct these fees as operating expenses as long as the fees are paid for work related to your rental activity.

Did You Know?

Did you know that:

  • Landlords can greatly increase the depreciation deductions they receive the first few years they own rental property by using segmented depreciation.
  • Careful planning can permit you to deduct, in a single year, the cost of improvements to rental property that you would otherwise have to deduct over 27.5 years.
  • You can rent out a vacation home tax-free, in some cases.
  • Most small landlords can deduct up to $25,000 in rental property losses each year.
  • A special tax rule permits some landlords to deduct 100% of their rental property losses every year, no matter how much.
  • People who rent property to their family or friends can lose virtually all of their tax deductions.

If you didn’t know one or more of these facts, you could be paying far more tax than you need to.

by: Stephen Fishman , J.D.