Top Rental Property Expenses You Can Deduct on Your U.S. Tax Return
Question
Answer
If you own a rental property in the United States, you’re entitled to deduct a range of expenses against your rental income each year. Understanding which costs qualify and how to report them on your tax return can lower your taxable income and improve your cash flow. This FAQ explains the basics of deducting rental property expenses without diving into full legal advice.
To deduct expenses, report your rental income and outlays on IRS Schedule E (Form 1040). Keep thorough records—copies of invoices, bills, bank statements and mileage logs—for at least three years. Here are the most common deductible categories:
- Mortgage Interest
Interest paid on loans used to acquire or improve the property—for primary mortgages and home equity loans—is fully deductible. - Property Taxes
State, local and foreign real estate taxes paid during the year on your rental property. - Insurance Premiums
Fire, theft, flood and landlord liability insurance policies for your rental unit. - Repairs and Maintenance
Costs to keep the property in good working order (e.g., painting, fixing leaks, replacing broken windows). Note: improvements that add value must be depreciated. - Professional Fees
Payments to attorneys, accountants, property managers and real estate agents related to renting activities. - Utilities
Electricity, gas, water, trash collection and other services paid by you, the landlord. - Depreciation
Allocate the cost of the building (not the land) over 27.5 years using the Modified Accelerated Cost Recovery System (MACRS). - Travel and Auto
Deduct either actual vehicle expenses or the IRS standard mileage rate (e.g., 65.5¢ per mile in 2024) for trips to your rental property for repairs, management or rent collection. - Advertising
Costs to market your property—including online listings, signage and print ads.
Partial-year rentals, mixed personal use (vacation home) or short-term rentals (e.g., Airbnb) follow special rules. If you live in the property part of the year, you must prorate deductions based on days rented versus personal use days.
Before filing, it’s advisable to review IRS Publication 527, Residential Rental Property for detailed guidance. Because tax laws change and individual circumstances vary, buyers are recommended to verify your strategy with a licensed CPA or tax attorney.
