About Tax Deductions for Rental Property

If you own rental property, there are a number of tax deductions that you can take to significantly lower your taxable income. Typically, your expenses are deductible in the year that you paid them. Always keep detailed records of any expenses you intend to deduct.

Mortgage Interest

The interest paid on loans used toward acquiring or maintaining your rental property is tax deductible.

Depreciation

You may take a deduction each year for depreciation. For residential rental property, the deduction is taken over a 27.5 year period.

Rental Equipment

The cost of equipment that you rent for your rental property is tax deductible.

Travel Expenses

Ordinary and necessary travel expenses for your rental properties are deductible. For mileage reimbursement rates, refer to IRS Publication 463, Chapter 4.

Repairs

Any repairs made to your rental property are tax deductible. Repairs are defined as being necessary for keeping your property in good operating condition. Improvements are not tax deductible, so be sure you understand the difference.

Other Deductions

Insurance, legal fees, rental payments, taxes, tax return preparation fees and utilities are also deductible.

Resources

• IRS Publication 527