The short answer

Landlord tax deductions: mortgage interest, depreciation, repairs, property management, insurance, and more. What rental property owners can write off in 2026.

Landlord Tax Deductions: What You Can Write Off on Rental Property

Rental income is taxable as ordinary income — but the IRS allows landlords to deduct a wide range of expenses against that income. Many small landlords overpay taxes simply because they don't know what they're allowed to deduct. Here's a comprehensive breakdown.

Note: This is general information, not tax advice. Consult a CPA or tax professional for your specific situation.

The Big One: Depreciation

Depreciation is the most valuable deduction most landlords don't use correctly. The IRS allows you to deduct the cost of a residential rental property over 27.5 years — regardless of whether the property is actually losing value.

How it works: If you bought a rental property for $300,000 and the land is worth $50,000, the depreciable basis is $250,000. Divide by 27.5 years = $9,090 per year in depreciation deductions, reducing your taxable rental income by that amount every year.

Catch: When you sell the property, the IRS "recaptures" depreciation you've taken, taxing it at up to 25%. But the tax-deferred benefit over the holding period is typically still a significant advantage.

Appliances, carpeting, and improvements are depreciated on separate schedules (typically 5–15 years).

Mortgage Interest

The interest portion of your mortgage payment on a rental property is fully deductible. This is typically the largest cash expense for leveraged landlords. Keep your annual Form 1098 from your lender.

Property Taxes

Annual property taxes on your rental are fully deductible as a rental expense (unlike primary residences, where the SALT deduction is capped at $10,000 — that cap doesn't apply to rental properties).

Repairs and Maintenance

Expenses to keep the property in its current working condition are deductible in the year incurred:

• Fixing a leaky faucet
• Repainting after tenant damage
• Replacing a broken appliance
• HVAC tune-ups
• Pest control

Important distinction: Repairs are deductible. Improvements are not (immediately). Replacing a water heater is a repair. Adding a central air system where none existed is an improvement that must be capitalized and depreciated.

Property Management Fees

If you use a property management company (typically 8–12% of monthly rent), those fees are fully deductible. This includes tenant screening fees, leasing commissions, and management software subscriptions.

Insurance Premiums

Your landlord/rental property insurance premium is deductible. If you pay for umbrella liability insurance, the portion attributable to the rental property is deductible.

Utilities Paid by Landlord

If you pay for any utilities (water, trash, heat in some multi-unit buildings), those are deductible. Utilities the tenant pays directly are not your deduction.

Professional Services

• Attorney fees for lease drafting, eviction proceedings, or legal consultations
• CPA fees for preparing your rental property tax schedule
• Real estate agent commissions for finding tenants (typically 1 month's rent)

All deductible.

Advertising and Tenant Screening

The cost to advertise your rental (Zillow premium listings, etc.) and screen tenants (credit reports, background check services, income verification services) are deductible business expenses.

Travel and Vehicle Expenses

Miles driven to collect rent, show the property, or perform maintenance are deductible. You can use the standard mileage rate (67 cents/mile in 2024) or track actual vehicle expenses.

Home Office Deduction

If you manage your rental business from a home office used exclusively for that purpose, you may be able to deduct a portion of your home office expenses. This is one of the more scrutinized deductions — make sure you qualify under IRS rules before claiming it.

What You Cannot Deduct

• Improvements (must be capitalized and depreciated)
• Your own labor (if you fix things yourself, you can't deduct the value of your time)
• The cost of acquiring the property (except through depreciation)
• Personal expenses mixed with rental expenses (must be allocated proportionately)

Passive Activity Loss Rules

For most landlords, rental income and losses are classified as "passive activity." Passive losses generally can only offset passive income — not your W-2 wages. However, there's an exception:

$25,000 allowance: If you actively manage the rental (make management decisions, approve tenants, etc.) and your adjusted gross income is under $100,000, you can deduct up to $25,000 of net rental losses against other income. This phases out between $100,000–$150,000 AGI.

Real estate professional status: If more than 50% of your working hours and over 750 hours per year are in real estate activities, you may qualify to deduct losses without limit.

Keep Every Receipt

The IRS can audit rental schedules. Keep receipts and records for every expense, categorized by property. A simple spreadsheet or landlord accounting software (QuickBooks, Stessa, or Landlord Studio) will make tax time significantly easier.

Tenant Screening as a Deductible Expense

Screening costs — including any income verification services you use for applicants — are a deductible business expense. Tools like Settl that provide bank-verified income and rental history reports fall into this category. More importantly, thorough screening reduces the risk of costly evictions — and eviction-related losses are also often deductible (unpaid rent, court costs, repair costs from departing tenants), but far better to avoid them entirely.

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