Have you decided to turn your property in Chesapeake, VA, into a rental and manage it yourself? If so, it's a wise move. According to ZipRecruiter, landlords in the city make an average annual salary of $91,047, with the top earners taking home as much as $146,650!
However, you must implement effective budgeting and financial reporting to maximize your income potential. Otherwise, you might only break even or lose more than you generate.
If you're unsure where to start, don't worry; PMI Virginia is here to help. Read on as we've shared real estate finance reporting and budget planning tips.
Understand Your Tax Responsibilities
As a Chesapeake landlord and property manager, you must pay federal, state, and city taxes. Knowing your tax duties is crucial to developing an effective real estate financial management plan.
Federal Taxes
As the Internal Revenue Service (IRS) explains, rental property owners must report their rental income and the associated expenses they can deduct from it. Deductible expenses include:
- Property taxes
- Operating expenses
- Property depreciation
- Property repairs
- Mortgage interest fees
So, by knowing your tax duties, you'll also learn which deductions to include in your federal income tax report.
State Taxes
Virginia also levies taxes on all the income residents and non-residents earn (Code of Virginia § 58.1-320). So, whether you're a resident or an out-of-state landlord, you must pay state income taxes on your Chesapeake, VA, rental earnings.
You must also pay property taxes under the Code of Virginia § 58.1-32.
Local Taxes
Under Chapter 30 (Finance and Taxation) of the City of Chesapeake, VA, Code, real estate property owners must pay various local taxes. One is the real estate tax (Article XVI). Article XIV, Sec. 30-456 also states that if you rent out your property as a short-term rental, you must pay property tax, ranging from 1% to 1.5%, on its gross proceeds.
Record All Expenses
Maintain accurate records of all the costs of operating and managing your rental business. In addition to those listed above, you should keep track of administrative fees, including advertising and marketing your property.
You must also track losses and costs resulting from vacancies. For instance, you should record the expenses you incur from cleaning and staging your home and traveling for property showings or viewings.
Hire a Rental Property Management Firm
If you want to simplify your life as a landlord, consider outsourcing your property management responsibilities to the pros. For example, here at PMI Virginia, you can rely on us to oversee all aspects of your rental business, including but not limited to:
- Marketing
- Tenant placement
- Property accounting, including budgeting and financial reporting
- Property maintenance and repairs
- Rent collection
- Eviction protection
With our expert full-service solutions, state-of-the-art property accounting software, and financial analysis techniques, we can help you maximize your rental income.
Leave Budgeting and Financial Reporting to PMI Virginia
Being a Chesapeake landlord and property manager may be a lucrative career, but it's a 24/7 job. So, why not leave property management, including budgeting and financial reporting, to our experts here at PMI Virginia?
Our owners and managers, Troy and Patti Robertson, have been in the real estate business since 1993. With our extensive industry experience, we can help you maximize your Chesapeake property and rental income.
Contact us today, and we'll happily share insights and give you a free property analysis!
