50-Item Rental Property Deductions Checklist [Free Template]

Are you a landlord looking for ways to reduce the amount of year-end taxable income from your rental properties? Are you aware of the rental property deductions available to you?

Many landlords miss out on potential tax savings by not taking full advantage of tax deductions for their rental property. This article discusses how creating a rental property deduction checklist can help ensure you take full advantage of available tax savings.

What Rental Property Expenses Are Tax Deductible?

Owning rental properties can be a great way to supplement your income and generate long-term wealth. However, to maximize your tax savings, it's essential to understand what types of expenses are tax deductible. Here are 50 rental property tax deductions you may be able to claim:

1. Accounting and bookkeeping services
2. Advertising and promotion costs
3. Appliance rental or lease payments
4. Bank charges and interest on loans, lines of credit, and bank accounts
5. Business entity pass-through deduction*
6. Business use of vehicle: mileage, maintenance, and repairs
7. Cleaning and janitorial services
8. Closing costs (some may be expensed the year they are incurred, while others must be added to the property cost basis)
9. Credit card processing fees
10. Depreciation expenses
11. Educational costs
12. Garbage collection charges
13. Gifts to tenants
14. Health insurance premiums (for employees)
15. HOA fees
16. Home office deduction
17. Income tax withholding (for employees)
18. Landlord insurance
19. Landscaping equipment and tools
20. Legal and professional services
21. Legal forms
22. License and registration fees (such as a sales tax license or LLC dues and fees)
23. Losses from theft or casualty (losses from theft or damage to rental property)
24. Maintenance and repairs
25. Management software and hardware purchases
26. Marketing fees
27. Mold remediation
28. Mortgage insurance premium
29. Mortgage interest
30. Office supplies and equipment
31. Pest control and insect extermination charges
32. Private mortgage insurance (PMI)
33. Professional publications and subscriptions
34. Property management fees
35. Property management software expenses
36. Property tax
37. Retirement plan contributions (for employees)
38. Security systems and alarm monitoring fees
39. Segmented depreciation (property, such as flooring and appliances, can be depreciated faster than the building)
40. Snow removal services
41. Supplies and materials
42. Tax preparation fees
43. Telephone and internet services
44. Tenant screening fees
45. Travel expenses for property maintenance or management
46. Unemployment insurance contributions
47. Utilities
48. Vacancy losses due to nonpayment of rent
49. Wages paid to employees who manage the rental property
50. Worker's compensation insurance premiums

*Under the Tax Cuts and Jobs Act (TCJA), landlords can deduct 20% of their rental business income from their taxable business income amount, with restrictions such as a phase-out for single taxpayers earning over $163,300 and married taxpayers earning over $326,600. Higher-earning landlords may still be able to take advantage, depending on the conditions.

This list is not exhaustive, but these are some of the more common deductions associated with residential rental properties. With a detailed rental property deductions checklist, you can take full advantage of year-end deductions and reduce the taxable income you need to report.

At the end of each year, you should review your rental property deductions checklist and ensure you have claimed all rental expenses eligible for deduction. Always consult with a tax professional before filing your taxes to ensure that you include all available deductions. The information above is for educational purposes and should not be considered advice.

Free Rental Property Deductions Checklist

Are you in search of a tailored checklist for yourself? Our free template fits the bill.

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In a few clicks, you'll have all you need to create an ideal rental property deductions list and can customize it to fit your specific requirements. Download the template now to start preparing your perfect checklist today.

Once you click the link, select "File" at the top left-hand corner of the page, click "Download," and choose your preferred format for the template.

Using Schedule E to Report Expenses

Schedule E (Form 1040) is a US tax form used to report income, expenses, and profit or loss from a rental property. It must be filed with your federal income tax return annually. Schedule E groups rental property expenses into the following categories.

Advertising

Amounts spent on advertising the rental property, such as newspaper and magazine ads, flyers, and other promotional materials.

Auto and Travel

Travel expenditures related to the rental property, including fuel and vehicle maintenance costs for trips associated with management, marketing, or other rental activities.

Cleaning and Maintenance

Any costs incurred to keep the rental property clean or in good repair, such as carpet cleaning and appliance repairs.

Commissions

Fees paid for real estate management services related to the rental property.

Depreciation Expense

This expense is an allowance for the wear and tear of the property over time. It’s based on a percentage of the property’s original value and useful life expectancy and is typically spread out over 27.5 years for a residential rental property.

Insurance

Cost of landlord insurance premiums paid to cover both liability risks associated with tenants and harm caused by natural disasters or fires that may occur at the rental property location.

Legal and Professional Fees

Attorney fees or accountant expenses incurred for managing the rental real estate activities, including the preparation of tax returns, inspection reports, or similar services.

Management Fees

These are costs associated with third-party management agents, such as those needed for property management.

Mortgage Interest

The portion of your monthly loan payment dedicated to the interest payable on any loans taken out to purchase or improve your rental property.

Other Interest

These expenses may include interest on credit card debt for charges directly related to owning and operating the property.

Other Expenses

Any unrecaptured cost shared during the year not attributed to the previous deduction categories above, such as legal fees to evict a tenant, a reasonable payment made to a tenant with a cash-for-keys incentive, or HOA dues.

Repairs and Improvements

These expenses are related to any repairs or improvements required to maintain the rental property, including the cost of labor, materials, and equipment used for the repair or improvement. Examples include plumbing repairs, painting, electric work, and other renovation-type repairs or replacements.

Supplies​ ​and ​Materials

Amounts used to purchase items needed for the rental property activities, such as tools, paint, building materials, and other supplies.

Taxes​​

The owner of a rental property may be liable for various taxes, including the local rental or occupancy taxes that are part of the monthly rent collected from the tenant and property taxes.

Utilities

The landlord of a rental property may incur expenses related to utilities such as electricity, water, sewage, cable, and internet services. These costs must be paid directly by the landlord to be deductible.

How Rental Property Expenses Could Reduce Taxable Income

Deducting rental property expenses from your gross income effectively reduces the amount of taxable net income. By taking advantage of all available deductions, real estate investors can minimize their tax liabilities and maximize profits from rental properties.

For example, say a real estate investor owns a rental property generating $50,000 of reported gross income during the calendar year. Deducting all allowable property expenses—such as mortgage interest, insurance premiums, repairs and improvements, taxes, and other costs totaling up to $25,000—reduces the net taxable income by 50%, making it only $25,000 instead of $50,000.

Real estate investors can also take advantage of depreciation to help decrease their taxable income without spending any money. Unlike standard property expenses, depreciation is a non-cash expense that reduces an asset's book value over time without affecting cash flow.

Guidelines for Taking Rental Property Deductions

To claim deductions for rental properties, owners must first determine whether the property qualifies as a rental under the IRS definition. Generally, if an owner charges rent in exchange for the use of their property by another person or entity (such as a corporation), it will likely qualify.

Deductions are only available for expenses related to renting your property, like repairs and maintenance costs, mortgage interest payments, homeowners’ insurance premiums, and property taxes. These are all common deductible items.

Additionally, you may be eligible to deduct certain costs associated with managing your rental property, such as advertising fees or legal services used in connection with tenant matters.

Remember you must separate personal expenses from rental use expenses when claiming rental property deductions. If you use part of your rental property for personal purposes—such as when renting out rooms in your home or a vacation rental used partially for personal use—you can deduct only a portion of the cost.

To properly document these expenses as tax-deductible costs in the eyes of the IRS, you need to keep detailed records and include receipts or invoices showing what you paid and when. If the IRS audits you, you need to be able to prove the legitimacy of your deductions.

By following these guidelines when filing taxes, landlords can ensure they take advantage of all available rental property deductions from the IRS. Properly claiming these deductions can help lower your overall tax liability, so it's essential to understand how to do it correctly.

You can learn more about rental property deductions by visiting these pages from the IRS website:

• Tips on Rental Real Estate Income, Deductions and Recordkeeping
• Publication 527: Residential Rental Property (Including Rental of Vacation Homes)
• Publication 946: How to Depreciate Property