Rental Property Question

[russkwww]

I hired a management company to take over the management of my rental property in August 2021.  How will this change my taxes regarding Schedule E.

Am I an active or passive owner / investor?

Can I still take all of the deductions I have taken in prior years?

1. Mortgage Interest
2. Property Taxes
3. Repairs
4. Other

[ColeenD3]

Yes, you can still take deductions. However, you must actively participate even if the property manager does most of the work.

Active participation.

Active participation isn’t the same as material participation (defined later). Active participation is a less stringent standard than material participation. For example, you may be treated as actively participating if you make management decisions in a significant and bona fide sense. Management decisions that count as active participation include approving new tenants, deciding on rental terms, approving expenditures, and similar decisions.

[nda2010tax]

Yes you can deduct the same things you deducted before. It's easy to qualify as an Active Participant, all you have to do is keep records of your rental income and expenses, and be responsible for decisions about maintenance, repairs, lawn care, etc. You should be paying property taxes and insurance directly, not through the management Co., so you can easily get those deductions as well. You don't have to be responsible for collecting rent, advertising, legal stuff, etc. 

Some of the other things that are deductible:

1. Visiting your property - mileage

2. Copying, mailing, supplies you need at home to manage your property

3. Property bills for gas, water, electric that you pay. (You can't deduct these if the tenants are paying those bills).

4. Costs for property security