Landlord's tax deduction guide

Written by sharyl stockstill
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Landlord's tax deduction guide
Apartments equal tax deductions for landlords (modern apartments image by green 308 from

A Landlord's tax deduction guide can provide real estate owners with a wide range of options when preparing their personal income taxes. Almost everything pertaining to the maintenance, purchase, insurance and upkeep is deductible as per the Internal Revenue Service's guides. The key is to keep accurate records of all income and expenses associated with the apartments. Records need to be kept for seven years in the case of audits.

Most landlords qualify as sole proprietorship; therefore, reporting rental income and expenses are done on Schedule D of the Landlord's 1040 Income tax form. Partnerships and Corporations will file a Schedule K for the tax year.


Income is any rent payments received from the tenants of the landlord's properties. It is taxable under IRS rules. However, before the income is listed as income, all expenses, both tangible and intangible are deducted from the gross rents. The gross rents are reported, as are the expenses, leaving a final figure that is transferred onto the Landlord's personal 1040 tax form.

Tangible Expenses

Anything the landlord buys for his property, which includes things like refrigerators, new curtains, utility bills, as well as any labour for installation of the tangible property is deductible from the gross rent receipts.

Intangible Deductibles

Intangible deductibles that the Landlord can deduct from his gross rent receipts are such items as insurance, health care for any maintenance workers, and depreciation. These can be calculated by either receipts or prorated over the life expectancy of the item in question. For example, the depreciation on the apartments can be deducted over a fifteen year period of time. On the other hand, a refrigerator has a life expectancy of 3 years and can be deducted over the three year period.

Insurance can be prorated through the year. If you buy the property in July, you can prorate the insurance policy to the life of the policy or take the entire amount off at one time.

Landlords will have to choose between cash or accrual accounting methods at the beginning of ownership of the property.

Loss of Properties

Tenants may move out still owing rent or may damage something costing more than any damage deposit the tenant made upon leasing. The landlord may be able to recoup some of those funds as losses against any gross rent receipts. In some cases, there may be limitations and you will need to consult with an accountant for further information on individual cases.

Personal Expenses

A Landlord may have personal expenses such as an automobile used to meet with potential tenants or phone calls made from his personal phone. The IRS will allow those expenses to be deducted from the gross rent receipts if there is documentation to back up the claim. In other words, use your phone bill and keep an automobile log to record when you are tending to business concerning your rental property. This will provide grounds for your deduction if you are ever audited.

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