What expenses can I deduct from my Rental Income?

Owning a rental property can be a great way to build wealth, but it also comes with ongoing costs and additional tax reporting responsibilities. The good news is that the IRS allows landlords to deduct many of the ordinary and necessary expenses incurred to operate, maintain, and manage rental property. 

If you report your rental activity on Schedule E (Supplemental Income and Loss), you can generally deduct expenses that are common, reasonable, and directly related to your rental business.

Common Rental Property Tax Deductions

Mortgage Interest

For many landlords, mortgage interest is one of the largest rental property deductions.
You can generally deduct:
  • Interest paid on a mortgage secured by the rental property
  • Loan origination fees and points (subject to applicable rules)
  • Interest on loans used to improve the rental property
Keep in mind that only the interest portion of your mortgage payment is deductible. The principal portion of the payment is not deductible because it represents repayment of borrowed funds.

Property Taxes

Property taxes assessed on your rental property are generally deductible.

Examples include:

  • Real estate property taxes
  • Local property assessments that qualify as deductible taxes
  • Rental licensing fees required by local governments
  • Occupancy taxes paid by short-term rental operators
Keep records of your annual property tax statements and any local licensing fees paid during the year.

Travel and Transportation Expenses

If you travel for rental property business, you may be able to deduct transportation expenses.

Examples include trips to:

  • Show the property to prospective tenants
  • Collect rent
  • Inspect the property
  • Coordinate repairs and maintenance

Ordinary commuting expenses between your home and a regular workplace are not deductible.

You may use either:

  • Actual vehicle expenses, or
  • The IRS standard mileage rate (if eligible)
Maintain a mileage log or other documentation supporting business travel.

Utilities

If you pay utility costs for your rental property, those expenses are generally deductible.

Examples include:

  • Electricity
  • Water
  • Sewer service
  • Natural gas
  • Trash collection
  • Internet service
  • Cable television provided to tenants
If a tenant reimburses you for utilities, you generally report the reimbursement as rental income while still deducting the related expense.

Depreciation

Rental property wears out over time. The IRS allows you to recover the cost of certain property through depreciation deductions.

Residential rental buildings are generally depreciated over 27.5 years.

Items commonly depreciated include:

  • Residential rental buildings (excluding land)
  • Appliances
  • Furniture
  • Flooring
  • Certain property improvements

Depreciation begins when the property is placed into service as a rental, even if it is temporarily vacant.

Landlords typically report depreciation using Form 4562, Depreciation and Amortization.

2026 Tax Law Update: Bonus Depreciation

The One Big Beautiful Bill Act (OBBBA) restored 100% bonus depreciation for qualifying property placed in service during 2025 and later eligible years under current law.

This may allow landlords to immediately deduct the full cost of certain qualifying assets, such as:
  • Appliances
  • Furniture
  • Certain property improvements
  • Other eligible personal property used in the rental activity
Because bonus depreciation rules can be complex, review the specific requirements before claiming the deduction.

Cleaning, Maintenance, and Repairs

Routine maintenance and repair expenses are generally deductible in the year they are paid.

Examples include:

  • Fixing a leaking faucet
  • Painting
  • Replacing broken locks
  • Minor plumbing repairs
  • HVAC servicing
  • Lawn maintenance

Repairs vs. Improvements

A key distinction is whether the work restores the property or significantly improves it.

Repairs are generally deductible immediately.

Improvements must usually be capitalized and depreciated over time.

Examples of improvements include:

  • Installing a new roof
  • Adding a room
  • Remodeling a kitchen
  • Significant structural upgrades

Labor Costs

You can generally deduct amounts paid to:
  • Contractors
  • Maintenance personnel
  • Property managers
  • Landscapers
  • Cleaning services
If you perform the work yourself, your own labor is not deductible. However, you may deduct qualifying out-of-pocket expenses, such as tool rentals or supplies used for repairs.

Legal and Professional Fees

Many professional expenses related to operating a rental property are deductible.

Examples include:

  • Tax preparation fees allocable to the rental activity
  • Legal fees for leases and tenant matters
  • Eviction-related legal expenses
  • Tenant screening services
  • Accounting fees
Legal costs related to acquiring, defending ownership of, or improving the property generally must be capitalized rather than deducted as current expenses.

Insurance Premiums

Insurance premiums covering the rental property are generally deductible.

Examples include:

  • Landlord insurance
  • Hazard insurance
  • Fire and casualty coverage
  • Liability insurance
  • Flood insurance
  • Workers' compensation insurance (if applicable)

Office Expenses

If you maintain an office used for managing your rental activities, you may be able to deduct related expenses.

This could include:

  • A qualifying home office
  • Office rent
  • Office supplies
  • Business equipment used to manage rentals
Any personal use must be properly separated from business use.

Commissions

Real estate commissions and leasing fees paid to locate or place tenants are generally deductible rental expenses.

Examples include:

  • Leasing agent commissions
  • Tenant placement fees
  • Referral fees related to tenant acquisition

Advertising and Marketing

Expenses incurred to attract tenants are generally deductible.

Examples include:

  • Online rental listings
  • Newspaper advertisements
  • Social media advertising
  • Website costs related to the rental activity
  • Printed marketing materials

Management Fees

Property management fees are deductible whether you:
  • Hire a professional management company, or
  • Pay a third party to assist with managing the property
If you self-manage the property, be sure to maintain accurate records of all rental expenses throughout the year.

How Do I Report Expenses That Were Included on a 1099 Form?

If you issued a Form 1099 to a contractor or vendor for work performed on your rental property, enter the expense under the appropriate Schedule E expense category, such as repairs, management fees, legal fees, or contractor expenses.

The software allows you to report the rental expense itself, but it does not allow you to prepare or issue Forms 1099 to vendors or contractors.

How Do I Enter Rental Expenses in the Program?

To report rental income and expenses:
  1. Federal
  2. Income – Select My Forms
  3. Profit or Loss From Rentals and Royalties (Schedule E)
  4. Select either:
    • General Expenses, or
    • Depreciation
Enter each expense in the category that most closely matches the cost incurred.
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