What to Do if Your Income Dipped Due to COVID-19
By Roxy Julian
Since the pandemic began, renters have been struggling to pay their debts, putting landlords in financially precarious positions. This is especially the case for individual landlords or those with small- to medium-sized rental spaces. Unlike larger real estate companies and REITs, many of these landlords rely on rental payments to get by, so the pandemic has cut them off from a valuable source of income. If you’re struggling with the same problem, read on for actionable tips on what you can do next:
Review Your Savings
It’s clear that the effects of the pandemic will linger long after it’s gone. Everyone will be dealing with various financial setbacks, but this is especially the case for landlords. Even so, it’s important to asses and adjust your savings goals accordingly, and the question of how exactly to do so depends on your current financial situation. If you’re one of the lucky ones that are currently employed, but could use a boost in savings, it’s time to start putting money into an emergency fund. Cut down on unnecessary expenses like takeout and gym memberships. Instead, put the extra cash in your emergency fund. We live in uncertain times, so it doesn’t hurt to be prepared. However, if you’re unemployed and your primary source of income was the rental payments, you’ll need to dip into your savings and start looking for income elsewhere. Just make sure to plot a budget and stick to it.
Seek Financial Support
The COVID-19 pandemic has affected landlords across the country, so local governments are pitching in to help. Take advantage of grant programs that you are eligible for. The extra funding is sure to help sort out your budget. In addition to local grants, there’s also the CARES Act, which was passed last March to help unemployed Americans get by despite the pandemic. Although these benefits were to expire by 2021, a law has been passes to extend it for thousands of New Jersey residents. It promises an additional thirteen weeks of CARES Act benefits for unemployed Americans residing in New Jersey.
However, if you have debt, you’ll need to talk to your creditors to discuss your options. Many offer hardship program benefits for those experiencing financial losses from the pandemic. Otherwise, you can talk to them about extending your deadline, waiving fees, or plotting out a new payment plan.
Know the Rules Surrounding Tax Losses
The global economic crisis has caused real estate properties to run up tax losses for this year, and it’s reasonably expected to carry over to the next. Knowing what you can write off helps you stretch out your savings further, at least until you find another, more sustainable source of income. As per federal income tax guidelines, property managers can deduct mortgage interest, real estate taxes, and basic operating expenses from their taxable income. Basic operating expenses include utilities, insurance, and any form of repair or maintenance. There have also been multiple tax relief provisions, so make sure to read up on those and utilize them when possible.
The COVID-19 pandemic has muddied everyone’s financial plans, and landlords are bearing the brunt of this. Despite these hurdles, know that you have options. The important thing is to plot out your next steps carefully. And of course, don’t forget to look after yourself. These are challenging times for all of us.
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