Landlord Tax Deductions: What You Can Write Off

Rental income is taxable, but the ordinary and necessary costs of running a rental generally reduce it. This overview covers the main deductions for U.S. landlords. Tax rules change, so confirm details with the IRS or a tax professional.

Where rental income and expenses go

Most individual landlords report rental income and expenses on Schedule E (Form 1040). The IRS explains the rules in Publication 527, Residential Rental Property, available at irs.gov. For a line-by-line walkthrough, see our Schedule E guide.

Common deductible expenses

• Mortgage interest on loans for the rental property
• Points paid on a rental loan, which are generally deducted over the life of the loan rather than all at once
• Property taxes
• Insurance premiums on the rental
• Repairs and maintenance that keep the property in working order
• Utilities you pay
• Property management fees and commissions
• Advertising and screening costs
• Legal and professional fees such as a tax preparer or attorney
• Local transportation and travel for rental purposes, such as driving to collect rent or to manage or maintain the property. Trips between your home and the rental can be treated as nondeductible commuting in some situations, so keep a log and ask your preparer.
• Supplies and small tools

Depreciation

You generally cannot deduct the purchase price of a rental building all at once. Instead you recover the cost of the building (not the land) over time through depreciation. For residential rental property in the U.S., the recovery period is generally 27.5 years, using the straight-line method and a mid-month convention. Appliances, carpet, and furniture used in a residential rental are generally 5-year property, so they are recovered faster.

Depreciation is often one of the largest deductions. It also lowers your basis, and the IRS reduces your basis by the depreciation you were allowed to take even if you did not claim it, so skipping it does not help at sale. You generally report new depreciation on Form 4562 in the year an asset is placed in service. If you converted a former home to a rental, the depreciable basis is generally the lesser of your adjusted basis or the fair market value at the time of conversion.

Special (bonus) depreciation rules also change. The 2025 tax law (P.L. 119-21) made a 100% additional first-year depreciation deduction permanent for qualified property acquired after January 19, 2025, and the IRS issued interim guidance in Notice 2026-11. It generally covers property with a recovery period of 20 years or less, such as appliances and carpet, not the 27.5-year building itself. Ask your preparer whether any of your assets qualify. See rental property depreciation explained for more.

Repairs vs improvements

The rule of thumb: repairs keep the property in its ordinary operating condition, while improvements better the property, restore it (for example, replacing a major component), or adapt it to a new use. Our repairs vs. improvements guide goes deeper.

The IRS tangible property regulations also include safe harbors that can let you deduct some costs that might otherwise be capitalized:

• De minimis safe harbor: per the IRS tangible property regulations FAQ, taxpayers without an audited (“applicable”) financial statement can deduct items costing up to $2,500 per invoice or item, if they make the annual election. That limit has applied since 2016 and is not indexed for inflation.
• Routine maintenance safe harbor: recurring work on a building or building system that you reasonably expect to do more than once in the 10 years after it is placed in service.
• Small taxpayer safe harbor: for owners with average annual gross receipts of $10 million or less and a building with an unadjusted basis under $1 million, if total repairs, maintenance, and improvements on that building for the year do not exceed the lesser of $10,000 or 2% of its unadjusted basis.

The elections are generally made by attaching a statement to a timely filed return. Limits and conditions can be updated, so check the current rules on IRS.gov or with your preparer before relying on them.

Losses and the passive activity rules

Rental activities are generally passive, so a rental loss may not offset your wages or other income right away. IRS Publication 925 describes a special allowance of up to $25,000 for owners who actively participate, which phases out as modified adjusted gross income rises from $100,000 to $150,000, per the 2025 edition. If you are married filing separately and lived apart from your spouse all year, the limit is $12,500, phasing out between $50,000 and $75,000; if you lived together at any time during the year, you generally cannot use the allowance. These dollar amounts are fixed in the statute (IRC 469(i)) and are not adjusted for inflation, and the 2025 tax law did not change them, so they also apply for 2026. Disallowed losses generally carry forward. Real estate professionals who meet IRS tests are treated differently.

Keep good records

• Separate bank account and credit card for the rental
• Receipts for every expense, with the property and purpose noted
• A mileage log if you deduct vehicle use
• Closing statements, improvement invoices, and depreciation schedules

See rental record keeping for how long to keep each item.

Year-end routine

1. Reconcile your rental bank account.
2. Total income and expenses by category.
3. Gather loan interest and property tax statements.
4. Review improvements and update depreciation.
5. Decide with your preparer whether to make any safe harbor elections.
6. Send everything to your preparer early.

Good records turn tax season from a scramble into a short checklist.

Related guides

• Passive Activity Loss Rules for Landlords, Explained
• 1099 Requirements for Landlords: Who to Report and When