Tax deductions for rental property are different from those homeowners are allowed for a primary residence. Renting is the business and the property is similar to the business inventory. The expenses incurred in order to earn income from the rental property are usually tax deductible. Many of these deductions are the same as those for other businesses. Mortgage expense and real estate depreciation are the most unique deductions.
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Landlords can deduct the expense from property losses. This includes losses and damage from natural disasters, fires and thefts. Even partial loss or damage to the rental property is tax deductible.
Like homeowners, landlords can deduct the interest paid from the mortgage on their home. Unlike homeowners, landlords get to deduct the interest from multiple property mortgages.
Travel between homes and any travel required for the business (purchasing supplies, making repairs and visiting tenants) is tax deductible. There is more than one way to deduct for travel. Landlords can deduct the real expenses or use the standard mileage deduction that the government updates each year.
The services of accountants, attorneys, process servers, property managers and financial advisers are all necessary for running a rental property business. As a result, the fees that these professionals charge is tax deductible.
Insurance premiums on rental property are tax deductible. This includes insurance for work vehicles, rental property insurance and employee health insurance premiums. The insurance must be the usual insurance used in the rental property business.
Care and Maintenance
The repairs to the rental property are deductible expenses. They must be the typical of the rental property industry and routine. Examples are repainting, repairing leaky plumbing, cleaning gutters, mowing, etc. these are essentially the repairs that keep the property in a usable condition for renting. Improvements or remodels are not deductible expenses.
The purchase price of the rental property is stretched over a number of years and each year, a portion of that price is tax deductible. This is called the depreciation deduction. The longer you keep the property, the more this deduction benefits you.
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