Top Tax Deductions for Landlords: Keep More of Your Rental Income

by Stephen Morris CPA, MBT, CCIM

Did you know that landlords can legally reduce their taxable income by thousands of dollars each year? 🚀 Yet, many rental property owners miss out on key deductions, leaving money on the table.

If you own rental property, this guide is for you! Let’s break down the top tax deductions for landlords so you can maximize your profits, reduce tax liability, and stay IRS-compliant. 💼💡

🔥 1. Mortgage Interest Deduction

🔹 What It Is:
One of the biggest tax deductions available to landlords is mortgage interest. If you have a loan on your rental property, you can deduct the interest portion of your monthly payments. 📉

🔹 What’s Deductible:
✅ Interest on your primary mortgage for the rental property
✅ Interest on home equity loans or lines of credit (HELOCs) used for property-related expenses
✅ Points paid on loans used to finance rental properties

📌 Pro Tip: Interest paid on personal credit cards or loans not used for rental expenses is not deductible! Make sure to track your loan purpose carefully. 🏦

🛠️ 2. Repairs & Maintenance Costs

🔹 What It Is:
💰 Any repair or maintenance expense that keeps your rental property in good condition is fully deductible in the year it was paid.

🔹 What’s Deductible:
✅ Painting, patching drywall, fixing leaks
✅ Plumbing & electrical repairs
✅ HVAC servicing & appliance repairs
✅ Landscaping, pest control, and trash removal

📌 Pro Tip: Major renovations (like a new roof or room additions) are NOT deductible as repairs—instead, these are capital improvements and must be depreciated over time. 📊

🏡 3. Depreciation Deduction

🔹 What It Is:
Depreciation allows landlords to recover the cost of their property over time. The IRS assumes that buildings lose value due to wear and tear, and this deduction helps offset that loss.

🔹 How It Works:
🏠 Residential rental properties depreciate over 27.5 years
🏢 Commercial properties depreciate over 39 years

📌 Pro Tip: You can’t depreciate land—only the building’s value. Make sure your CPA calculates depreciation correctly to avoid overpaying taxes. 📉

📑 4. Property Taxes

🔹 What It Is:
Property taxes paid on your rental property are fully deductible against your rental income.

🔹 What’s Deductible:
✅ Annual property tax payments
✅ Special assessments for property improvements
✅ Local rental property tax fees

📌 Pro Tip: Don’t forget about state and local tax incentives! Some areas offer special deductions or credits for landlords investing in affordable housing or energy-efficient upgrades. 🌎

📄 5. Property Management & Professional Fees

🔹 What It Is:
If you hire professionals to help manage your rental, their fees are fully deductible.

🔹 What’s Deductible:
✅ Property management fees (for collecting rent, handling maintenance, etc.)
✅ Attorney & legal fees for lease agreements or tenant disputes
✅ Accounting & CPA fees for preparing your tax returns
✅ Real estate agent commissions on rental property transactions

📌 Pro Tip: Even fees for tax planning are deductible if they’re directly related to your rental business! 💼

🚰 6. Utilities & Operating Expenses

🔹 What It Is:
If you cover utilities for your tenants, these costs are deductible.

🔹 What’s Deductible:
✅ Electricity, water, and gas bills
✅ Internet & cable (if included in rent)
✅ Security system fees
✅ HOA dues & condo fees

📌 Pro Tip: If tenants reimburse you for utilities, you must report that as rental income—but you can still deduct the original cost! 📊

🚙 7. Travel & Mileage Expenses

🔹 What It Is:
Landlords can deduct travel expenses when checking on properties, meeting with tenants, or handling business operations.

🔹 What’s Deductible:
✅ Mileage for driving to rental properties 🚗
✅ Flights, hotels, and meals for long-distance property management
✅ Gas, parking fees, and tolls

📌 Pro Tip: Use an app like MileIQ or QuickBooks Self-Employed to track mileage and expenses automatically! ✅

🛡️ 8. Insurance Premiums

🔹 What It Is:
💼 All insurance costs related to rental properties are fully deductible.

🔹 What’s Deductible:
✅ Landlord insurance policies
✅ Flood & disaster coverage
✅ Liability insurance
✅ Workers’ compensation (if you hire employees)

📌 Pro Tip: If you rent short-term (Airbnb, VRBO), check if you need business insurance—regular landlord policies may not cover short-term rentals! 🏡

🏛️ 9. Home Office Deduction

🔹 What It Is:
🏠 If you manage your rentals from a dedicated home office, you can deduct part of your home expenses.

🔹 What’s Deductible:
✅ A percentage of rent/mortgage
✅ Utilities, internet, phone bills
✅ Office furniture & supplies

📌 Pro Tip: The IRS requires your home office to be used EXCLUSIVELY for rental business—so no dual-use spaces! 🖥️

🚀 Final Thoughts: Keep More of Your Rental Profits!

💰 Being a landlord comes with incredible tax benefits—but only if you take full advantage of deductions!

✅ Deducting mortgage interest, repairs, depreciation, and property management fees reduces your taxable income.
✅ Good record-keeping is KEY—use accounting software to track deductions and avoid IRS issues.
✅ A real estate CPA can help you maximize savings while keeping you IRS-compliant.

📌 Need help optimizing your tax strategy? 💼 Work with a specialist real estate investing CPA! 📊

Back to Advise RE Resource Center articles list

RENTAL PROPERTY TAX STRATEGY Articles

Tax Implications of Renting to Family or Friends
Landlord Tax Filing Checklist
Tax Rules for Vacation Rentals
Tax Planning for Long-Term Rental Investments
Tax Benefits of Energy Efficiency Upgrades
Mortgage Interest Deduction for Rentals
Managing Taxes on Commercial Rental Properties

Tax Implications of Selling a Rental Property
Top Tax Deductions for Landlords
Tax Strategies for Multi-Family Property Owners
Understanding Depreciation Limits for Rentals
Understanding Passive Activity Loss Rules
Understanding Self-Employment Tax for Landlords
Deducting Legal Fees as a Landlord