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Rental Property Tax Deductions

Updated on June 28, 2013
Don't miss all the great tax deductions available to you as a rental property owner.
Don't miss all the great tax deductions available to you as a rental property owner.

Rental Property Tax Deductions

Do you own or are you thinking of purchasing rental property. Do you know how owning rental property will affect your income taxes. You will find that generally, rental income is defined as the income you receive for the occupancy or use of rental property. But you should also be aware that any expenses paid by a tenant and any security deposit not returned to a tenant counts as income.

And by now your probably asking yourself okay I now know what counts as income but what can I deduct. You will find that tax deductions with rental income are really quite similar to any other type of business income. You can technically deduct any expense you have to pay out for up keep and maintenance of any rental property you own.

The obvious deductions that we probably all know about include.

1. Your Mortgage Payments.

2. Cleaning Expenses.

3. Your Insurance Premiums.

4. Anything Service Related Like Landscaping, Cutting The Grass, Etc.

5. Your Repairs.

6. Other General Maintenance.

7. Depreciation Of The Property And Items Like Stoves, Washing Machines, Dryers, Refrigerators and etc.

Things that you can deduct that are overlooked by many people include any expenses you have to pay out to find tenants. This will include fliers, newspaper ads, etc. You can also deduct the expenses of what you have to pay to your lawyer or accountant. You will want to keep a mileage log in your vehicles because you can also deduct the expenses you incur for driving back and forth to your rental properties.

Don't forget to take your property tax deduction and you can also deduct any interest paid on a mortgage. As you can see it really is to your advantage to own rental properties. You are operating a business as a landlord so if the people living in apartment G move owing you three months rent you will be able to claim that as a loss on your income taxes. It is known as a bad debt tax deduction. However be sure to get signed rental agreements and keep all paper work. If you did not file bad debt deductions last year but you have documented bad debt deductions you can go back and file an amended return for last year and file for your bad debt tax deduction.

Don't make the mistake though of thinking that you can deduct the expense of lost rent. By this I mean if you have a property set empty for part of the year you can not take that as a deduction. However rental properties are a great way to invest money and there are many deductions that you can take advantage of.

As a landlord you should always require that your tenants sign a rental agreement and be sure to file and keep your copy. Also make it a habit to always as for a receipt on any expenses you pay that are related to your rental property. File and keep any paper work for at least seven years.

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Thanks for reading. If you like this Hub Page please consider linking to it.

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    • crazyhorsesghost profile image

      Thomas Byers 6 years ago from East Coast , United States

      Thanks much and I'm glad to see you reading my Hub Pages.

    • LillyGrillzit profile image

      Lori J Latimer 6 years ago from The River Valley, Arkansas

      Excellent advice and tips