9 Rental Property Tax Deductions for Landlords

Being a landlord can help you build wealth, but it’s also a lot of work. On top of the finances and responsibilities of your own living space, you have to find tenants, secure insurance and pay a mortgage and property taxes. Renting a home can also complicate your personal tax situation. Luckily, the government allows you to deduct some expenses associated with running a rental property. The IRS stipulates that deductible expenses must be ordinary and generally accepted in the rental business, along with being necessary for managing and maintaining the property.

You can also work with a financial advisor who can help manage the tax and financial impact of your real estate holdings.

Top Rental Property Tax Deductions

As a rental property owner, there are several expenses that you can deduct from your income taxes to lower your liability and improve your overall operation. These expenses relate to several business-related activities that include buying, operating and maintaining the property and they can all add up to make it a thriving rental property. The nine most common rental property tax deductions are:

1. Mortgage Interest

Most homeowners use a mortgage to purchase their own home, and the same goes for rental properties. Landlords with a mortgage often find that loan interest is their largest deductible expense. To clarify, you can’t deduct the portion of your mortgage payment that goes toward the principal loan amount. Instead, the deduction only applies to payments toward interest charges. The interest portion paid over the year will be reported to you on Form 1098.

In addition to mortgage interest, you may be able to deduct origination fees and points used to purchase or refinance your rental property, interest on unsecured loans used for improvements and any credit card interest for purchases related to your rental property. Come tax time, you must have already spent money on these purchases to qualify. Since it can be tricky to determine what counts and how to file these extraneous interest charges, consider consulting an accountant or financial advisor to help.

2. Property Taxes

Almost every state and local government collects property taxes. Depending on your rental property’s location, they can range anywhere from a few hundred dollars to hundreds of thousands. You can find the exact tax rate in your area by checking your escrow summary or inquiring with your tax professional. If your state has rental licensing requirements, you can also deduct any accompanying landlord or vacation rental license fees.

If you manage short-term rentals, your state, city, county or town may charge a kind of fee known as an occupancy tax. Very similar to sales tax, you can deduct occupancy taxes too. Speaking of which, if you pay sales tax on business-related items, wages and Social Security taxes for employees or inspection fees, be sure to deduct those as well.

3. Travel and Transportation Expenses

If you’re a landlord who travels to your properties, your transportation expenses may be deductible. This includes paying to show your rental property and collecting rental income throughout the year.

There are two methods for deducting business use of your personal vehicle: actual expenses or the standard mileage rate. For 2025, the standard mileage rate for business use was 70 cents per mile.

4. Real Estate Depreciation

Over time, wear, tear and obsolescence lower the value of your rental property and its contents. This process, known as depreciation, is tax deductible. You can claim depreciation as soon as your home or apartment is available for rent, even if you don’t have any tenants yet. The deduction must be spread out over the useful life of the property, which is 27.5 years for residential rental properties according to the IRS. Keep in mind, though, that the value of the structure can depreciate, but not the value of the land.

You can also claim the value of equipment that helps you run your rental business, like your computer or automobile, as well as improvements you make to the property that add value, adapt its use or extend its life. This could include installing a new roof, adding furniture or updating the household appliances. To qualify as a deductible expense, it must be expected to last for more than a year, be valuable to your rental business and lose value over time. IRS Publication 946, “How to Depreciate Property,” can help you navigate this sometimes convoluted process.

5. Maintenance and Repairs

A young couple fixing up one of their rental properties

While major home improvements are deductible through depreciation, the tax code does allow you to deduct certain repair and maintenance costs separately. The big difference is that these efforts keep your property in rentable condition, but do not add significant value.

According to IRS Publication 527, examples of improvements include additions (bedrooms, bathrooms, decks, garages, patios, porches), major landscaping, (such as adding a pool or a fence), heating and air conditioning, plumbing, insulation, interior upgrades (kitchen, built-in appliances, wall-to-wall carpeting, and other miscellaneous upgrades (roofing, storm windows, security systems, wiring).

If you hire someone else to do the work, you can deduct the labor costs. The same goes for property or on-site managers, should you choose to hire one. If you take the “do-it-yourself” approach, you can deduct any rental fees for tools and equipment.

6. Utilities

Every landlord handles utilities differently. If you choose to cover things like gas, electricity, water, heating and AC for your tenant, they’ll be tax deductible for you. If you pay for internet, cable or satellite, you can deduct those as a utility expense as well. Even if your tenant agrees to reimburse you for utilities later, you can continue to file the rental property deduction and must claim the reimbursement as income.

7. Legal and Professional Fees

Landlords can deduct certain professional fees from the rental property income. If you use a CPA or computer software to prepare your tax return, be sure to deduct the cost. Hire a lawyer to oversee rental paperwork at any point in the year. Deduct those exorbitant hourly fees. If you used a real estate agent to find your tenants, deduct the commission. Advertise the property in the newspaper, over the radio, or online. Deduct those ad dollars.

You can even write off advisor services so long as you meet to discuss the rental property. If you have to evict someone, this deduction would help cover the legal and court filing fees. These are all considered operating expenses and should be deducted as such. You cannot, however, deduct legal fees used to defend the title of your property or recover and improve the property.

8. Insurance Premiums

Lenders can stipulate that homeowners get an insurance policy before securing their mortgage. Luckily, any form of insurance is considered an ordinary and necessary rental property expense and is thus deductible. The deduction applies to basic homeowners insurance as well as special peril and liability insurance.

If you have employees, you can deduct the cost of their health and workers’ compensation insurance too. Although insurance premiums tend to be a bit higher for rentals, this boost can help offset that. Landlords can also deduct unreimbursed losses, including those caused by hurricanes, earthquakes, floods or theft.

9. Office Supplies

If you manage rental properties, you may deduct the cost of office supplies used exclusively for that purpose. This can include items like a printer, computer software, or office materials necessary for managing your rentals. If you maintain a dedicated home office that is used regularly and exclusively for rental activities, you may also qualify for the home office deduction. Be aware that this deduction has specific IRS requirements, and personal use of space or supplies can disqualify part of the expense.

Keep detailed records of your purchases and the time spent managing your properties. Deductions related to mixed-use items or home office claims are often subject to IRS scrutiny, so accurate documentation is important.

How to Claim Rental Property Tax Deductions

A landlord driving to a rental property.

In general, you report rental income and deduct rental expenses in the same year they are paid or incurred, using IRS Schedule E (Form 1040). To simplify the process and substantiate your claims in case of an audit, keep accurate and organized records of all rental income and expenses throughout the year.

If you use the rental property for personal purposes during the year, the deduction rules become more complex. You must allocate expenses between personal and rental use. IRS rules limit how many days a property can be used personally (typically no more than 14 days or 10% of total rental days) before it is considered a personal residence, which affects what deductions you can claim on Schedule E.

Personal-use expenses generally cannot be deducted on Schedule E. However, certain expenses—such as mortgage interest or property taxes—may be deductible on Schedule A if you itemize deductions.

Bottom Line

You can deduct several expenses related to the operation of your rental property as a business. From the cost to maintain the yard to repairing the property in between tenants or even the mortgage interest, you pay all year long, you’ll be able to cut down your total tax bill. The important thing is to keep meticulous records of all your operational activities so that you can properly claim the right expenses and the right amounts at the end of the year.

Tax Planning Tips

If your financial situation is complex, or you’re unsure how much you’ll owe in taxes, a financial advisor can help you calculate your liability and avoid costly mistakes. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
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