10 rental property deductions for landlords

Operating a business and owning property allow you to tap into more tax deductions than you may realize. Landlords have access to a host of useful deductions (just like homeowners) yet millions still pay more taxes on rental income than required. Rental real estate is loaded with tax benefits, from mortgage interest to maintenance, and all landlords should understand how they can keep money in their pockets.

The American tax code is notoriously complicated, and you should always consult with your CPA or financial advisor to fully understand what deductions you can and can’t make. That said, there are a number of popular rental property deductions for landlords.

1.  Interest

Mortgage Interest is typically the biggest deductible expense for all property owners, but especially landlords. Landlords can commonly write off:

• Mortgage interest payments on rental property loans
• Mortgage interest payments on loans used to improve rental property
• Interest on credit card debt accumulated to pay for goods or services used in rental activity

2. Depreciation

"Rental property depreciation" does allow you to deduct the cost of a rental property over time. The Internal Revenue Service (IRS) assumes a rental property will lose an average of 3.6% of its value every year. This value loss is called depreciation and landlords can subtract depreciation from their taxable income every year.

Since they can’t account for appreciation in one year, landlords generally deduct a portion of the cost of the property over several years instead. For residential real property, you can deduct portions for 27.5 years, even if the property actually increases in value.

3. Repairs

Repairing property may cost a significant amount of money, but landlords can recoup some of those costs by writing them off. The repairs must be ordinary, necessary, and reasonable in amount, and must be fully deducted in the year in which they’re incurred. Things like repainting, fixing leaks, plastering, and replacing broken windows are all likely deductible.

Learn more about tax-deductible home improvements

4. Personal property

Most landlords have some personal property that’s used in a rental property, like kitchen appliances or washing machines. Most also have personal property they use for rental activities, like tools and gardening equipment or a laptop.

Usually, landlords can deduct the cost of personal property used in one year using the de minimis safe harbor deduction for property costing up to $2,000. They can also claim 100% bonus depreciation for property purchased and placed into service between 2018 and 2022. Property purchased and placed in service each year after 2022 has a lesser bonus depreciation percentage.

5. Travel

Landlords are effectively business owners, meaning they can deduct business-related travel. So, if a landlord drives to perform rental activity like picking up a part for a repair or dealing with a tenant’s complaint in person, they could deduct those travel expenses.

That said, landlords may not deduct travel done to improve the rental property — you must add these expenses to the property’s tax basis and depreciate the total amount over a 27.5-year window. 

Assuming a landlord drives a car, SUV, van, pickup, or panel track for rental activity, they may deduct vehicle expenses in one of two ways:

• Deduct actual expenses like gasoline, upkeep, and repairs
• Use the standard mileage rate established by the IRS

If you don’t deduct vehicle expenses in the first year you use a car for your rental activity, you may not in the future, either. If you’re not sure which of these methods to use, it’s a good idea to default to the standard mileage rate in the first year so you don’t lose the option going forward.

Landlords may also deduct overnight expenses for rental activity, like airfare, hotel bills, meals, and other expenses. However, the IRS more closely scrutinizes overnight travel so you will need to keep meticulous records of these expenses if you hope to claim them.

6. Home office

Like others who work from home, landlords may deduct home office expenses. That includes both the space in the home devoted to office work, as well as a workshop or other home workspace used to conduct rental business. Homeowners and renters may both claim this deduction.

Learn more about the home office deduction

7. Employees and independent contractors

When landlords hire someone to perform services for their rental activity, they may deduct wages as a rental business expense. It’s available for both employees and independent contractors, although the IRS has more specific rules regarding the treatment of contractors so discuss this point with your CPA.

8. Insurance

Landlords tend to pay a lot in home insurance on rental properties, from fire, theft, and flood insurance for the property to landlord liability insurance. Fortunately, landlords may also deduct the premiums they pay for nearly any insurance related to rental activity. They can also deduct the cost of health and workers’ compensation insurance for W-2 employees.

Learn more about when homeowners insurance is deductible

9. Casualty and theft losses

Beyond insurance premiums, if a rental property is damaged or destroyed by a disaster like a fire, theft, or flood, you may be able to write off all or part of the loss. These are called casualty losses. How much you can deduct depends on the destroyed property and whether or not it was a loss covered by insurance.

10. Legal and professional services

Whether you’re expanding your property ownership or dealing with disputes, landlords may hire a lot of professional services, including real estate attorneys, accountants, property management companies, real estate investment advisors, and more. These fees are deductible as operating expenses so long as you hired legal and professional services for rental-related activity.