Tax exemption only applies if an owner has really exclusively lived in his property himself. The last three calendar years are decisive for this. Even if owners have only rented out the apartment for a short time during the period for example when they were moving to a new home, the sale then falls within the taxable area. In case of California property tax assessment this is the best deal here.
Tips on Tax Deducting a Rented Property
Deducting your own home from the tax, there are far fewer options than with rented properties. If you rent a property, i.e. do not live in it yourself but use it as an investment, you can take advantage of more tax advantages.
Tax Tips for Landlords
Property purchase price: For a property built up to 1924, the landlord can deduct 2.5 percent of the gross total price from tax every year. This is allowed until the total price for the purchase of the house has been reached. If the property was built after 1924, the owner can depreciate it with two percent per year.
Interest: The monthly interest that is incurred on the repayment of a mortgage loan for the property can be deducted from tax by landlords as business expenses.
Account management: If landlords have set up their own account for the income and expenses of the property, they can deduct the account management fees from tax as income-related expenses.
Property tax: In this country, property owners have to pay property tax every year. The municipalities determine the amount of property tax. Landlords can claim the property tax in full as income-related expenses in their tax return.
Ancillary costs: The landlord has to tax the ancillary costs paid by the tenant as income, but can then deduct them as income- related expenses in the tax return.
Office costs: You can deduct all costs that you as the landlord incur for telephone, stationery, postage and required software from the tax.
Travel expenses: As a landlord, claim all journeys that you make in connection with your rented property as travel expenses in your tax return.
Entertainment costs: You can deduct 70 percent of the entertainment costs incurred for discussions and meetings with the tenant.
Membership fees: As a landlord, are you a member of an association, for example the landlords’ association? Then you deduct the contributions from the tax.
Repairs: If work is necessary on the rented property, landlords can claim the costs of the craftsmen in their tax return.
Renovation: If you, as the landlord, have the property renovated after a tenant has moved out, you can deduct the costs incurred from your income.
Broker fees: If you seek the help of a broker to find a tenant, the fees incurred can be deducted from the rental income. But if the new tenant pays the brokerage fee, you as the landlord cannot deduct anything from the tax.
Likewise, the municipal council may decide to exempt dwellings which are located in areas not served by the refuse collection service , that is to say in practice those which are located more than 200 m from the point passing through the dumpsters or the nearest collection container.
However, the municipality can decide that all housing in the municipality is subject to the tax, even those located outside the garbage collection perimeter. For your part, you cannot ask to be exempted from paying TEOM on the pretext that you cannot use the garbage removal service, for example because your house is at the end of a dead end or in a road closed to traffic in which refuse dumpsters do not enter.