10 Tax Deductions for Rental Property Investing

Income that is derived from rental properties could be offset with several different tax deductions available to investors. The IRS rules are complex in the real estate industry and advice from a tax accountant is always best when planning deductions. There are some basic deductions for rental property investing that are available to most property owners. 

All deducted expenses must be be reasonable and necessary to qualify for tax benefits. This list is not designed to offer tax or financial advice. All questionable deductions should be discussed with real estate tax accountants.


10 Tax Deductions for Investment Property Owners 

1. Depreciation

The useful life of a property can be determined by tax accountants when estimating the annual depreciation available to write off each year. This time frame of dedications can be used to offset some taxes payable each year.

2. HOA Fees

Homeowner Association fees are generally able to be deducted from income derived from rental properties. Not all homes are in an area where HOA fees are collected each month.

3. Insurance Premiums

Homeowner insurance, liability insurance and other forms of protection that are available to property owners are usually able to be included as deductions each tax year.

4. Local Taxes

Most local taxation authorities apply sales tax or other use tax when services or purchased goods are applied to rental properties. These local taxes can often be included as deductions.

5. Professional Fees

There are certain professional fees that can be deducted by taxpayers each year. These include attorney fees, consulting fees, tax preparation fees or other professional fees included in the IRS publication 334.

6. Repairs

Improvements made to property each year must be capitalized and deducted over a period of time. Repairs for a property to keep the property in rentable condition can be deductible each year.

7. Expenses for Travel

A large percentage of travel dispenses to visit rental properties or manage some aspects of the ownership can be deducted as travel expenses. Proper allocation between business and personal travel expenses must be made to qualify.

8. Property Management Fees

The services that property managers supply each year to property owners could be deducted as service fees. The total fees can include advertising, rental payment collection, commissions and other fees payable.

9. Interest

Full or partial ownership in investment property allows each owner to deduct most forms of interest. This can be from loan payments or other instances where interest applies to the rental property.

10. Cleaning Fees

Rental properties must be cleaned in between each lease agreement to ensure properties are in livable condition. The cleaning fees to prepare properties for rent are fully deductible as a necessary expense each year.

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