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An Owner’s Guide to Rental Property Tax Deductions

Blanco Rental Property Owner Doing Her TaxesOne of the main advantages of owning Blanco rental properties is that, come tax time, you may enjoy the benefits of deductions that other taxpayers cannot. Yet, to benefit from these deductions, you need to know what they are and how to have your numbers ready before you begin filling out your return. In this guide, we will mention the tax deductions that rental property owners can utilize and how they can help reduce your tax liability every year.

Common Expenses You Can Deduct

Having a good understanding of your property’s common expenses is essential to optimizing your cash flows. It can also assist you at tax time since you can deduct most of them on your return. Budget expenses that are also tax-deductible include:

  • Repairs and maintenance. Everything you buy to maintain the condition of your property is normally a deductible expense. This includes fees paid to service providers, contractors, etc. Don’t forget that improvements – particularly significant ones – are not deductible as expenses. Therefore, they should be amortized as capital improvements instead.
  • Insurance. Insurance premiums for your landlord insurance policy, including any fire, flood, or personal liability insurance, are deductible expenses.
  • Utilities. You can deduct utility payments on your tax return if you spend on any utility service, including water, garbage, electric, or gas. Utilities paid by your tenants are not deductible.
  • Advertising. Any money you spend to market your property and/or find a new tenant is a deductible amount. This covers costs for a web domain or website hosting, online ads, and professional fees for photography or video tours.

Additional Tax Deductions

Apart from common expenses, there are several other deductions that rental property owners may receive to help reduce their tax liability. These tax deductions include:

  • Mortgage interest. Any mortgage interest you pay on related loans is tax-deductible for investment properties. This is probably one of the most beneficial deductions for rental property owners.
  • Depreciation. Another huge deduction that rental property owners may claim is depreciation. All properties tend to depreciate over time due to wear and tear. The positive aspect is that you can deduct a certain amount for this depreciation over the life of the property. You can also get depreciation on capital improvements, such as appliances, fences, and renovations.
  • Legal and professional fees. Just as you can deduct expenses paid for repair work or landscaping, you can also deduct the expenditure to attorneys or other professionals that perform services related to the management of your rental property. The majority of costs associated with eviction, Blanco property management, and tax preparation are also deductible.
  • Travel. Owning rental properties commonly includes a lot of here and there travel, whether you dwell in another state or only a few miles away. Those business-related miles can combine over a year and are deductible on your tax return. Just keep a log of your travel miles and any other travel-related expenses.

To take full advantage of all the deductions available to you, you must keep your property-related expenses organized and in one place. And there’s no reason to wait until the end of each year; you can start keeping track of your expenses immediately and add up as you move forward. Doing it this way can make your job smoother each year when tax season comes around.


Another way to make tax time smoother is to hire Real Property Management Highland to keep track of your operational expenses. Together with professional property management, we monitor your property’s income and expenses and provide reports that can make tax time much less difficult. Contact us online to learn more!

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