I Have a Rental. What Can I Deduct on My Rental Property?

Understanding what you can deduct on your rental property is essential for maximizing your tax benefits and keeping more of your rental income. Rental properties offer significant tax advantages when you know what qualifies.

Common Rental Property Deductions

• Mortgage Interest: The interest portion of your mortgage payment is deductible
• Property Taxes: Real estate taxes paid on the rental property
• Insurance: Premiums for property, liability, and flood insurance
• Repairs and Maintenance: Fixing leaks, painting, replacing broken fixtures
• Depreciation: The IRS allows you to depreciate residential rental property over 27.5 years
• Property Management Fees: If you hire a manager, those fees are deductible
• Utilities: If you pay utilities for the property
• Travel Expenses: Reasonable travel costs to manage your rental
• Legal and Professional Services: Attorney, accountant, and tax preparation fees related to the rental

Repairs vs. Improvements

It's important to distinguish between repairs (immediately deductible) and improvements (must be capitalized and depreciated). A repair maintains the property in its current condition, while an improvement adds value, prolongs its life, or adapts it to a new use.

Passive Activity Rules

Rental activities are generally considered passive, which means losses may be limited. However, if your adjusted gross income is under $100,000 and you actively participate in managing the rental, you can deduct up to $25,000 in rental losses against your other income.

Get Expert Help

Rental property tax rules are complex. Contact EverydayCPA for personalized guidance on maximizing your rental property deductions.