Let’s Talk About Basic Deductions for Rental Property Owners

Business Deductions - Generally Speaking

In general, the IRS allows you to deduct expenses that are ordinary and necessary in the course of your business. Ordinary is defined as common and accepted in your industry. Necessary means that it is appropriate for your trade or business. 

There are a few exceptions to this general rule that you should understand. 

• Capital Expenses - You are required to capitalize some expenses and take a deduction for them over time. Capital expenses refer to the purchases of business assets and property improvements. Business assets include properties, furniture & fixtures, machinery, property improvements, and vehicles.  

• Penalties are not deductible. 

Here are some basic deductions you can take as a rental property owner!

• Mortgage Interest 

• Real Estate Taxes

• Utilities - Water, Sewer, Electric, Heat Cost

• Property Management Expense 

• Cleaning fees

• Landscaping

• Home Office ($5 per sq ft standard deduction or prorated costs)

• Business Use Portion of Cell Phone

• Business Meals (50% Deductible for 2023)

• Business Travel

• Accounting & Legal Fees 

• Supplies 

• DeMinimis Repairs & Maintenance Costs 

And we saved the BEST for last!

• Depreciation for qualified property