Landlords constantly ask, “Is this deductible?” As their real estate agent (and often first line of advice), it’s handy to have a quick reference. Below is a bullet-point guide you can keep in your back pocket, covering common rental property expenses and whether they’re deductible.
Use this as a cheat sheet when fielding client questions – and of course, always recommend they verify specifics with a tax professional.
(Tip: Many of these are topics in Real Estate CE courses on property management and tax, so it’s great refreshment for your own knowledge too!)
Mortgage Interest: Yes
Interest on a loan for a rental property is fully deductible as a rental expense. It’s one of the biggest deductions. (This is separate from the mortgage interest on a personal residence, which has its own rules – but for rentals, it’s an operating expense (irs.gov).)
Property Taxes: Yes
Property taxes on a rental are deductible as well. Unlike the personal home where there’s a $10k SALT cap, on a rental there’s no such limit – it’s part of your expense on Schedule E (irs.gov). (If it’s a mixed-use property, prorate the taxes to the rental portion.)
Insurance Premiums: Yes
Landlord insurance, fire insurance, flood insurance – any insurance for the rental property is deductible. It’s an ordinary and necessary expense to protect the investment (irs.gov). If you prepay multiple years, you may have to deduct it over the coverage period (but most people pay annually, which is fine).
Repairs and Maintenance: Yes
Ordinary repairs (fixing toilets, patching leaks) and maintenance (like painting a room or servicing the furnace) are fully deductible in the year paid (irs.gov). These costs keep the property in good condition. Example: That $200 handyman bill to fix a gutter – write it off. A $500 invoice for an HVAC tune-up – deductible.
Pro-tip: If your client does the work themselves, they can deduct materials but not the value of their own labor.
Improvements: Not immediately
Improvements (like a new roof, a room addition, remodeling the kitchen) are capital expenditures, not expenses (irs.gov). The cost isn’t deducted all at once, but rather depreciated over time (27.5 years for residential real estate, or possibly faster for certain equipment).
So if the client asks “We just replaced all the windows, can we deduct that $10k?”, the answer is it’s not an expense this year – it will go into their depreciation schedule. (Encourage them to keep good records of improvement costs for when they sell, too.)
Utilities: Yes
If the landlord pays utilities (electricity, water, gas, trash, etc.) for the rental, those are deductible operating expenses (irs.gov). Often, multi-unit owners pay some utilities – they should total up all bills paid on behalf of tenants. If tenants reimburse for utilities, that reimbursement counts as income, but then the expense is still deductible, so it nets out.
Travel to the Property: Yes, with conditions.
Traveling to manage or maintain the rental is deductible. This includes mileage on their car for trips to the property, to Home Depot for rental supplies, or to meet with tenants. If the property is long-distance, airfare and lodging can be deductible too.
Important: The trip must be primarily for the rental business – you can’t deduct a vacation where you “checked on the condo for a couple hours.” For example, if your client drives 50 miles round-trip to their rental to do an inspection, that mileage is deductible at the IRS standard rate. Keep good records (date, purpose, miles)!
Note: If the trip is partly personal, they should allocate and only deduct the business portion.
And traveling to improve the property (say, to oversee a renovation) – those travel costs become part of the improvement’s capital cost, not an immediate deduction.
Property Management Fees: Yes.
If your client hires a property manager or management company, those fees are tax-deductible expenses (belonghome.com). This is a common question: “I pay 10% of the rent to a management firm – can I write that off?”
Absolutely – it’s an ordinary expense for running the rental. In fact, any professional fees related to the rental (legal fees for leases or evictions, accounting fees for bookkeeping) are deductible too as long as they’re directly tied to the rental activity.
Advertising and Tenant Acquisition: Yes.
Money spent on advertising for tenants – whether online listings, newspaper ads, or referral fees – is deductible. Also, if they pay a realtor or broker a commission to find a tenant, that fee is deductible as a rental expense (it’s like a finder’s fee).
HOA or Condo Fees: Yes, if it’s a rental property.
Ongoing homeowner association fees for a condo you rent out are deductible. If there are special assessments that go towards improvements (say a one-time fee for a new roof on the building), those might be capitalized, but regular monthly dues are an expense.
Travel for Real Estate Education
Generally No for just education purposes (that would be a personal investment expense, which isn’t deductible). But if it’s travel to a continuing education class required for your rental business, that might be treated as an education expense (subject to some rules). This is more on the landlord’s side – not common unless they’re big enough to consider themselves in the business of being a landlord full-time.
Personal Use Portion: No
Any portion of an expense that is personal (not related to rental use) is not deductible as a rental expense (irs.gov). For example, if your client has a vacation home they rent part of the year and use part of the year, and they pay $1,000 in utilities for the year, but only half the time the home was rented, they can only deduct ~$500 as rental expense (the other $500 is personal use – not deductible on Schedule E). Make sure they prorate properly.
The Common Questions
This quick guide isn’t exhaustive, but it hits the common questions: “Can I deduct X?” In summary, most expenses associated with operating and maintaining a rental property are deductible (irs.gov), while big improvements are capitalized (irs.gov), and anything personal is excluded. When in doubt, lean on the side of caution and consult a tax pro.
But with these bullets at hand, you as an agent can confidently answer FAQs and demonstrate that you’re knowledgeable far beyond just leases and sales. That’s the kind of value that keeps clients coming back – and it’s why staying sharp via affordable real estate CE online resources and courses can make a real difference in your service level!
To Learn More...
For real estate professionals, understanding these concepts can be particularly valuable during discussions with clients about why REALTORS® and real estate agents are knowledgable professionals.
If you’re preparing for your Real Estate Continuing Education or looking to enhance your knowledge through a Real Estate Course, topics like tax benefits of residential rental property can help set you apart.
As part of your License Renewal Course or other Real Estate CE efforts, staying informed on foundational property concepts can make a big difference in your expertise and client relationships.