Did you know that landlords have an average income of $97,000 a year? If you own rental property, you could be making the big bucks. However, taxes get a little confusing if you don't know what you are doing.
If you don't know how property accounting works, you could be losing out on some of the money that you earn.
To avoid this, hire a property management company that will provide you with owner disbursements. Keep reading to learn more about them.
What Are Owner Disbursements?
Owner disbursements are payments of the earnings retained from owning a rental property. The amount is based on profit and does not come up as a business expense.
However, if you own a home and rent it out on your own, your taxes work differently depending on the classification of ownership.
If you allow a property management company to manage the rentals, you'll receive regular owner statements.
Owner statements include rental income and expenses your property incurs.
A property management company works with owners to make the details of investing in property easier.
For example, rental collection is one of the downsides to owning rental property especially if your tenants are difficult to deal with. Rental managers can help by collecting rent online.
Other benefits come in the form of account management. These companies have the experience to help you know what information is necessary for owners to have.
A property management report usually contains information you need as an owner. Owner disbursements are included in this report along with the following documents:
- Income report
- Expense report
- Operating statement
- Monthly balance
This is valuable owner information especially if you own more than one property. The best property management business will provide you with regular owner disbursements for all properties at one time.
Owner REIT Disbursements
Some owners buy shares in a real estate investment trust (REIT) instead of owning a piece of property.
To do this, you'd buy shares in a trust and the REIT pays out dividends from income to the owners. It's important to know that disbursement payments are different based on how an owner gets paid.
Ordinary income is passed to shareholders then there are capital gains from selling property and dividing the money.
If an owner chooses to get part or all of the investment back, they receive a return of capital.
Hire a Property Management Team
Owner disbursements work differently if you manage your own property. Instead of taking on all of the daily tasks yourself, hire a property management company that can help.
They will provide you with owner disbursements based on the earnings you make as a rental property owner. They will also provide you with other important documents that help with account management.
Don't wait any longer to build a team to run your property. Our services are here to help! Contact us to discover all of the things we can do for your property.