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K37comm
Level 2

Homestead Exemption

Selling our house in Texas and buying house in North Carolina. Want to rent out our house in Texas. Won’t qualify for Homestead Exemption on house in Texas, since will no longer be our primary residence. Any tax deductions we can take to offset higher property taxes in Texas?

1 Best answer

Accepted Solutions
Annette26
Employee Tax Expert

Homestead Exemption

When you have a rental property, you can take certain expenses and deduct them from your rental income, if you active participate in your rental property. This means, you must own at least 10% of the property and you made major management decisions for this property such as approving tenants and authorizing repairs. 

Some examples of deductible expenses are:

  • Real estate taxes
  • Insurance premiums
  • Repairs
  • Cleaning / Maintenance
  • Mortgage interest
  • Utilities (if paid for tenant)
  • Vehicle expenses for rental purposes like mileage to the property for maintenance and repairs, to the bank to take care of rental property accounts or to the post office to mail rent receipts and back home
  • Airfare, hotels and rental cars to travel to the rental property and back home
  • Management fees for property management companies, property managers or on-site managers
  • Professional and legal fees for tax prep and accounting advice and legal advice for rental matters
  • Advertising
  • Depreciation and Improvements on the property.

 

It is important to keep all the receipts for the expenses and keep track of the mileage. 

 

 

 

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4 Replies
K37comm
Level 2

Homestead Exemption

Correction: Keeping house we own in Texas (not selling), and want to rent.

Annette26
Employee Tax Expert

Homestead Exemption

When you have a rental property, you can take certain expenses and deduct them from your rental income, if you active participate in your rental property. This means, you must own at least 10% of the property and you made major management decisions for this property such as approving tenants and authorizing repairs. 

Some examples of deductible expenses are:

  • Real estate taxes
  • Insurance premiums
  • Repairs
  • Cleaning / Maintenance
  • Mortgage interest
  • Utilities (if paid for tenant)
  • Vehicle expenses for rental purposes like mileage to the property for maintenance and repairs, to the bank to take care of rental property accounts or to the post office to mail rent receipts and back home
  • Airfare, hotels and rental cars to travel to the rental property and back home
  • Management fees for property management companies, property managers or on-site managers
  • Professional and legal fees for tax prep and accounting advice and legal advice for rental matters
  • Advertising
  • Depreciation and Improvements on the property.

 

It is important to keep all the receipts for the expenses and keep track of the mileage. 

 

 

 

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
K37comm
Level 2

Homestead Exemption

Thank You !!!

I have no experience with renting property, so this information helps a great deal.

 

Is tax preparation more complicated when living in one state and renting property in another (North Carolina and Texas (respectfully)?

kdevere
Employee Tax Expert

Homestead Exemption

Texas does not have a state income tax, so since the property is located in Texas, there will not be an additional state return.  You will just report the income on your North Carolina state return when you file.  If the property was located in a state with income tax, it would mean you would file an additional state return.  

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**Mark the post that answers your question by clicking on "Mark as Best Answer"
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