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An Owner’s Guide to Rental Property Tax Deductions

Newtown Rental Property Owner Doing Her TaxesOne of the most significant advantages of owning Newtown rental properties is that, come tax time, you can make the most of deductions that other taxpayers cannot. Yet, to benefit from these deductions, you must first understand what they are and how to have your numbers ready before filling out your return. In this guide, we’ll look at the tax deductions that rental property owners can take and how they can help reduce your tax liability each year.

Common Expenses You Can Deduct

Having a strong grasp of your property’s common expenses is key to optimizing your cash flows. It can also help 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. Anything you pay to maintain the condition of your property is typically a deductible expense. This covers fees paid to service providers, contractors, and that. Take note that improvements – mostly large ones – are not deductible as expenses. Therefore, they need to 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 expend on any utility service, whether 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 includes the cost of a web domain or website hosting, online ads, and professional fees for photography or video tours.

Additional Tax Deductions

On top of common expenses, there are several other deductions that rental property owners may use to help reduce their tax liability. Among these tax deductions are:

  • Mortgage interest. Any mortgage interest you pay on related loans is tax-deductible for investment properties. This is frequently one of the most advantageous deductions for rental property owners.
  • Depreciation. Another excellent deduction that rental property owners can take is depreciation. All properties tend to depreciate over time due to wear and tear. The great news is that you can deduct a certain amount for this depreciation over the life of the property. You can also claim depreciation on capital improvements, such as appliances, fences, and renovations.
  • Legal and professional fees. Just like you can deduct expenses paid for repair work or landscaping, you may also deduct expenditures paid to attorneys or other professionals who give services related to the management of your rental property. The majority of costs associated with eviction, Newtown property management, and tax preparation are also deductible.
  • Travel. Owning rental properties typically requires a lot of back-and-forth travel, whether you reside in another state or only a few miles away. Those business-related miles can add up 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 provided to you, you have to keep your property-related expenses organized and in one place. And there’s no need to wait until the final moment; you can start keeping track of your expenses immediately and add as you go along. Doing it in this manner will make your work simpler every year when tax season comes around.


Hiring Real Property Management Prosperity to keep track of your operational expenses is another approach to make tax time simpler. In addition to professional property management, we take care of your property’s income and expenses and provide reports that can make tax time much more straightforward. Contact us online to learn more!

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