If you own rental properties, the IRS requires you to report all rental income on Schedule E for individually owned properties and on Form 8825 for properties owned through a partnership. Fortunately, there are several tax deductions landlords can take advantage of to save money. Here are five big ones:
- Depreciation is an allowable tax deduction for buildings due to structural decline. Essentially, it is an annual allowance for expected wear and tear that is depreciated over many years. Currently, the time frame for depreciation for residential real estate is 27 ½ years. However, that will change to 30 years under the new tax code in the 2019 tax season.
- Posting some ads to attract tenants? Deduct the cost.
Maintenance and Repairs
- Keeping your rental property in top shape can be expensive. Maintenance such as mowing the lawn, HOA fees, and smoke detector batteries are always expected. Repairs such as broken air conditioning or plumbing can sometimes sneak up on you. Luckily, all of these expenses are tax deductible.
- Insurance for a business purpose, such as a rental property, is tax deductible.
- Most rental properties have electricity, gas, and sewage expenses. Deduct these expenses even if the tenant reimburses you. Just be sure to report the reimbursement as rental income.
Remember, it is important to keep meticulous records of expenses in order to take advantage of these deductions. For more information and more landlord tax deductions, check out our Landlords Tax Page or visit Landlordology. For more resources for real estate investors, visit our Resources Page.
Related: 5 Notable Personal Tax Changes in the New Tax Code, Bonus Depreciation and Section 179 of the New Tax Code