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An Owner’s Guide to Rental Property Tax Deductions

Rosamond Rental Property Owner Doing Her TaxesOne of the greatest advantages of owning Rosamond rental properties is that, come tax time, you can take advantage of deductions that other taxpayers can’t. Yet, to benefit from these deductions, it is necessary to understand what they are and how to have your numbers ready before you continue filling out your return. In this guide, we will examine the tax deductions that rental property owners can take and how they can help reduce your tax liability yearly.

Common Expenses You Can Deduct

Having a complete understanding of your property’s common expenses is vital to optimizing your cash flows. It can also help you at tax time since you can deduct most of them on your return. Budget expenses that are also tax-deductible include:

  • Repairs and maintenance. Anything you disburse to maintain the condition of your property is normally a deductible expense. This includes fees paid to service providers, contractors, and more. Bear in mind that improvements – particularly huge ones – are not deductible as expenses. Hence, they should be amortized as capital improvements instead.
  • Insurance. Insurance premiums for your landlord insurance policy, including any fire, flood, or personal liability insurance, are deductible expenses.
  • Utilities. You can deduct utility payments on your tax return if you pay for any utility service, including water, garbage, electric, or gas. Utilities paid by your tenants are not deductible.
  • Advertising. Any money you spend to market your property and/or find a new tenant is a deductible amount. This includes if you pay for a web domain or website hosting, online ads, and professional fees for photography or video tours.

Additional Tax Deductions

Alongside common expenses, there are a handful of other deductions that rental property owners can utilize to help reduce their tax liability. These tax deductions entail:

  • Mortgage interest. Any mortgage interest you pay on related loans is tax-deductible for investment properties. This is often one of the most beneficial deductions for rental property owners.
  • Depreciation. Another excellent deduction that rental property owners can use is depreciation. Most properties seem to depreciate over time due to wear and tear. The great thing is that you can deduct a certain amount for this depreciation over the life of the property. You can also get depreciation on capital improvements, such as appliances, fences, and renovations.
  • Legal and professional fees. Just as you would deduct expenses paid for repair work or landscaping, you can also deduct the amount paid to attorneys or other professionals who deliver services related to the management of your rental property. Most costs associated with eviction, Rosamond property management, and tax preparation are also deductible.
  • Travel. Owning rental properties generally includes some here and there travel, whether you dwell in another state or only a few miles away. Those business-related miles can accumulate over a year and are deductible on your tax return. Just keep a log of your travel miles and any other travel-related expenses.

To take full advantage of all the deductions provided to you, you have to keep your property-related expenses organized and in one place. And there’s no reason to hold on until the end of each year; you can start keeping track of your expenses immediately and add as you go along. Doing it this way can do your job easier annually when tax season comes around.


Another option to make tax time uncomplicated is to work with Real Property Management Traditions to keep an eye on your operational expenses. Aside from professional property management, we keep track of your property’s income and expenses and provide reports that can make tax time much more relaxed. Contact us online to learn more!

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