Owning rental property isn’t just about collecting rent—it’s also about maximizing your returns by reducing your tax bill. The IRS allows landlords to deduct a wide range of expenses, but knowing what counts (and how to document it) is key to keeping more of your income.
This guide breaks down the most important tax deductions for landlords in 2025, with clear explanations and practical tips for compliance. Whether you own a single rental or a large portfolio, these deductions can make a big difference at tax time.
1. Mortgage Interest
Mortgage interest is often the largest single deduction for landlords. You can deduct the interest paid on loans used to acquire or improve your rental property, including:
- Primary mortgage on the rental property
- Home equity loans or lines of credit (if used for rental purposes)
- Points paid on the loan (spread over the life of the loan)
Keep detailed records of all loan statements and be sure to separate interest from principal payments—only the interest is deductible.
2. Property Taxes
State and local property taxes paid on your rental property are fully deductible. This includes real estate taxes assessed by the county, city, or other local authorities.
- Deduct only the taxes actually paid during the year
- Special assessments for improvements (sidewalks, sewers) are not deductible as taxes but may be depreciated
Save all tax bills and payment receipts for your records.
3. Repairs and Maintenance
Ordinary repairs and maintenance costs are fully deductible in the year paid. This includes expenses for:
- Fixing leaks, plumbing, or electrical issues
- Painting, patching walls, repairing floors
- Servicing heating and cooling systems
- Yard work, pest control, and trash removal
Improvements that add value or extend the property’s life (like a new roof or major remodel) must be depreciated over several years, not deducted all at once. Keep receipts and contracts to distinguish repairs from capital improvements.
4. Depreciation
Depreciation lets you deduct a portion of your property’s cost each year, reflecting normal wear and tear. For residential rentals, the IRS allows you to depreciate the building (not the land) over 27.5 years.
- Includes the original purchase price (less land value)
- Major improvements and renovations are added to your basis and depreciated
- Personal property (appliances, furniture) can be depreciated over shorter periods
Depreciation is complex—consider working with a tax professional to maximize this deduction and avoid IRS errors.
5. Utilities and Operating Expenses
If you pay for utilities or other operating expenses for your rental, those costs are deductible. Common examples:
- Water, sewer, gas, electricity, trash service
- Internet or cable (if included in rent)
- HOA dues, property management fees, advertising, office supplies
Keep all bills and receipts, and only deduct expenses actually paid during the year.
6. Insurance Premiums
Premiums paid for landlord insurance, liability, fire, flood, and even umbrella policies are fully deductible. This includes:
- Property insurance (dwelling)
- Landlord liability insurance
- Flood, earthquake, or special risk policies
- Umbrella and legal expense insurance
Deduct only the portion of premiums related to your rental property. If you have a combined policy, allocate costs appropriately and keep policy documents for your records.
7. Professional Services
Fees paid to attorneys, accountants, property managers, leasing agents, and other professionals for services related to your rental are fully deductible.
- Legal fees for lease drafting, evictions, or disputes
- Tax preparation and advisory fees
- Property management and leasing commissions
Always keep invoices and contracts to substantiate these deductions.
8. Travel and Mileage
If you travel to your rental property for repairs, inspections, or management, you can deduct travel expenses. This includes:
- Mileage driven (use the IRS standard rate)
- Airfare, hotels, and meals for out-of-town property owners
- Parking, tolls, and public transit
Keep a mileage log and all receipts. Only deduct trips that are directly related to managing or maintaining your rental property.
Bonus: Advanced Deduction Tips
- Home Office Deduction: If you manage your rental business from a dedicated space at home, you may be able to deduct a portion of your home expenses (utilities, internet, rent/mortgage interest).
- Start-Up Costs: Expenses incurred before renting out a property (advertising, legal fees, repairs) can often be deducted or amortized.
- Passive Activity Loss Rules: Understand IRS limits on deducting rental losses if your income exceeds certain thresholds; real estate professionals may qualify for exceptions.
- Qualified Business Income Deduction (QBI): Some landlords may qualify for a 20% deduction on rental income under Section 199A if certain criteria are met.
- Cost Segregation: Accelerate depreciation by breaking out components (carpet, appliances, landscaping) for faster write-offs.
Consult a tax professional to ensure you’re maximizing every deduction and staying compliant with the latest IRS rules.
Quick Reference Cheat Sheet
| Deduction | Examples | Documentation |
|---|---|---|
| Mortgage Interest | Loan statements | Year-end 1098 forms, payment records |
| Property Taxes | County/city taxes | Tax bills, payment receipts |
| Repairs & Maintenance | Plumbing, painting, pest control | Invoices, receipts, contracts |
| Depreciation | Building, appliances | Depreciation schedules, purchase docs |
| Utilities/Operating | Water, HOA, management fees | Bills, statements |
| Insurance | Landlord, liability, umbrella | Policy docs, payment receipts |
| Professional Services | Legal, accounting, management | Invoices, contracts |
| Travel/Mileage | Trips to property, inspections | Log, receipts |
Call to Action: Maximize Your Deductions with AAOL
Don’t leave money on the table. The American Association of Landlords (AAOL) provides members with:
- Tax deduction checklists
- State-specific compliance guides
- Updates on new IRS rules
- Access to expert advice and tax professionals
- Community support from experienced landlords
Join AAOL today at aaol.org and get the tools, knowledge, and support you need to keep more of your rental income.
This article is for informational purposes and does not constitute legal or tax advice. Always consult a qualified tax professional for guidance specific to your situation.
