10 Tax Deductions Every Landlord Should Know

The IRS lets you deduct legitimate business expenses from your rental income, as long as you can document them. These are ten deductions to check every year.

1. Mortgage Interest

The interest portion of your mortgage payments is deductible (the principal is not). For many landlords it's the largest deduction. On a $300,000 mortgage at 7%, you pay roughly $21,000 in interest in year one, and all of it comes off your rental income.

Your lender sends Form 1098 each January showing how much interest you paid.

2. Property Taxes

State and local property taxes on your rental are fully deductible as a business expense. This is separate from the SALT cap on your personal return (raised by OBBBA to $40,000 for 2025 and $40,400 for 2026, through 2029, with a phasedown at high incomes). Rental property taxes on Schedule E are not subject to the SALT cap.

You'll find the amount in your county tax assessor's records or your mortgage escrow statement.

3. Depreciation

Depreciation is a paper expense for the wear and tear on your building over time. The IRS lets you depreciate residential rental property over 27.5 years. If your building (excluding land) is worth $275,000, that's $10,000 a year in deductions with no cash out of pocket.

To figure it, take your building's basis (purchase price minus land value, plus improvements) and divide by 27.5.

Depreciation isn't optional. If you don't claim it, you'll still owe depreciation recapture when you sell.

Shorter-lived items: Appliances, carpeting, and furniture in a residential rental are 5-year property, and fences, driveways, and landscaping are 15-year property. Under the One Big Beautiful Bill Act, items like these acquired and placed in service after January 19, 2025 can qualify for 100% bonus depreciation, so you deduct the full cost in the first year (IRS Notice 2026-11). The building itself still uses 27.5 years.

4. Repairs and Maintenance

Costs to keep your property in working condition are deductible in the year you pay them. Examples:

• Fixing leaky faucets
• Repainting
• Replacing worn carpet
• HVAC repairs
• Appliance repairs

Improvements are handled differently. Fixing a broken window is a repair you deduct now. Replacing all the windows with energy-efficient upgrades is an improvement you depreciate over time.

5. Property Management Fees

Fees you pay a property manager or management company to collect rent, handle maintenance, or find tenants are 100% deductible. Your manager should send a year-end statement. If you use software like Rentra, your subscription is deductible too.

6. Insurance Premiums

Insurance premiums for your rental property are deductible, including:

• Landlord/dwelling insurance
• Liability coverage
• Flood insurance (if required)
• Umbrella policies (portion allocated to rentals)

7. Professional Services

You can deduct fees paid to professionals who help with your rental business:

• Accountant/CPA fees for rental-related tax work
• Attorney fees for lease reviews, evictions, entity setup
• Real estate agent commissions for finding tenants
• Consultant fees

8. Travel Expenses

You can deduct the cost of traveling to and from your rental property for business, using either:

• Actual expenses: Gas, maintenance, insurance (prorated for business use)
• Standard mileage rate: 70¢/mile for 2025. For 2026, 72.5¢/mile for miles driven January through June and 76¢/mile from July 1 (per IRS)

What counts as business travel:

• Driving to show the property
• Trips for maintenance or inspections
• Meeting with vendors or contractors
• Picking up supplies for the property

Keep a mileage log. Apps like MileIQ or a simple spreadsheet work fine. Record date, destination, purpose, and miles. If you claim car expenses on Schedule E, you also complete Part V of Form 4562.

9. Home Office Deduction

If you use part of your home exclusively for managing your rentals (reviewing applications, coordinating maintenance, doing bookkeeping), you can deduct a portion of your home expenses. A kitchen table doesn't qualify.

Two methods:

• Simplified: $5 per square foot, up to 300 sq ft ($1,500 max)
• Actual: Calculate percentage of home used for business, apply to mortgage interest, utilities, insurance, etc.

Note: home-office deduction only applies if your rental activity rises to a §162 trade or business. Pure passive Schedule E rentals typically don't qualify; consult your CPA before claiming.

10. Software and Tools

Subscriptions and tools you use to run your rentals are deductible business expenses, including:

• Property management software (Rentra, etc.)
• Accounting software (QuickBooks, etc.)
• Tenant screening services
• Online listing fees
• Bank account fees for your rental business account

Keep Records for Every Deduction

The IRS can ask you to support any deduction, so keep:

• Receipts: Save receipts for all expenses; the $75 de minimis rule under §274(d) applies only to travel, transportation, meals, and gifts. Other expenses need documentation regardless of amount.
• Mileage logs for travel
• Bank/credit card statements showing business expenses
• Contracts with vendors and property managers
• Photos of repairs and maintenance work

Property management software makes this easier. In Rentra, rent payments and maintenance requests are logged as they happen, and the expenses you record (you can paste in receipt text) are categorized and ready to export at tax time.

When to Work With a CPA

This article covers the basics. Tax planning gets more complicated with multiple properties, LLCs, 1031 exchanges, or cost segregation studies, and a CPA who specializes in real estate can help. Ask other landlords in your area for referrals.

Disclaimer: This is general information, not tax advice. Consult a qualified tax professional for your specific situation.

Rentra tracks rental income and the expenses you record, keeps a depreciation schedule, and exports a Schedule E report and a Form 4562 PDF for tax time.

Rentra's reports and Schedule E export