List of Deductible Expenses for a Rental Property
Key Deductible Expenses
Advertising and Marketing Costs to advertise the property and find new tenants, including online listings and professional photography fees.
Auto and Travel Expenses for travel related to the rental activity, such as trips for property maintenance, management, or collecting supplies. You can deduct actual expenses or use the standard mileage rate.
Cleaning and Maintenance Costs for day-to-day upkeep, such as professional cleaning services, carpet cleaning, pool cleaning, and snow removal.
Depreciation An allowance for the wear and tear of the property and its assets (like appliances and furniture) over time. The cost of the building (excluding land) is recovered through depreciation over a set number of years (typically 27.5 years for residential property).
Home Office If you use a dedicated space in your home exclusively and regularly for your rental business activities, you may be able to claim a home office deduction.
Insurance Premiums for landlord, fire, flood, theft, and liability insurance are deductible, as are workers' compensation insurance premiums for employees.
Interest The interest portion of your mortgage payments is a major deduction, as is interest on loans or credit cards used for property-related expenses.
Legal and Professional Fees Fees for attorneys, accountants, property managers, and other professionals are deductible, including tax preparation fees for Schedule E.
Management Fees Fees paid to a third-party property management company for services like rent collection and tenant screening.
Repairs and Supplies Costs incurred to keep the property in good operating condition (e.g., fixing a leaky faucet, painting a room), which are generally deductible in the year they occur. This is different from improvements, which must be depreciated.
Taxes Property taxes, local rental or occupancy taxes, and relevant sales taxes are deductible.
Tenant Screening Fees for running background checks or credit reports on prospective tenants.
Utilities Utility bills (electricity, water, gas, internet) paid by the landlord are deductible. If a tenant pays a utility bill and deducts it from the rent, the landlord must include the payment in income and can then deduct the expense.
Wages Wages paid to employees, such as a maintenance worker or property manager, are deductible.
Key Non-Deductible Expenses
Personal expenses Costs unrelated to the rental activity, such as personal travel or food during a repair stay.
Improvements Costs that add significant value or prolong the life of the property (e.g., a new addition, a full remodel) must be capitalized and depreciated over time, not deducted in a single year.
Commuting costs Travel expenses between your personal home and the rental property are generally considered non-deductible commuting costs.
Uncollected rent For most individual landlords using the cash basis of accounting, you cannot deduct income you never received.
For detailed guidance and to ensure compliance with the latest tax laws, consulting a qualified tax professional or referring directly to IRS Publication 527, Residential Rental Property is recommended.
