At EverydayCPA, we know that owning a rental property can be a rewarding investment. However, it also comes with its expenses. Understanding what you can deduct on your rental property is essential for maximizing your tax benefits and minimizing your taxable income. Here’s a breakdown of common deductions available to rental property owners.
I Have a Rental. What Can I Deduct on My Rental Property?
Mortgage Interest
One of the most significant deductions for rental property owners is mortgage interest. If you have a loan on your rental property, the interest you pay is deductible. This can significantly reduce your taxable income, making it crucial to keep accurate records of all interest payments throughout the year.
Property Taxes
Property taxes paid on your rental property are also deductible. You can typically deduct the amount you paid for local, state, and even certain foreign property taxes. Make sure to retain your tax statements as documentation to support your deductions when filing.
Operating Expenses
Operating expenses directly associated with managing your rental property are deductible. These can include maintenance and repair costs, insurance premiums, property management fees, utilities (if you cover them), and advertising expenses to attract tenants. Keeping detailed records of these costs can help you maximize your deductions.
Depreciation
Depreciation allows you to recover the cost of your rental property over time. The IRS provides guidelines for calculating depreciation on buildings, allowing you to deduct a portion of the property's cost each year. This non-cash deduction can provide significant tax savings, helping to balance out income generated from rent.
Schedule an Appointment With Our Tax Professionals
Understanding the various deductions available on your rental property can help you save money and improve your overall investment strategy. If you have questions or need assistance maximizing your rental property deductions, contact EverydayCPA today. Our expert tax team is ready to help you navigate the complexities of rental property taxation and ensure you’re taking full advantage of the allowable deductions.