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An Owner’s Guide to Rental Property Tax Deductions

Santa Clara Rental Property Owner Doing Her TaxesOne of the major advantages of owning Santa Clara rental properties is that, come tax time, you can profit from deductions that other taxpayers cannot. Yet, to benefit from these deductions, you must first learn what they are and how to have your numbers ready before you begin filling out your return. In this guide, we’ll review the tax deductions that rental property owners can claim and how they can help reduce your tax liability each year.

Common Expenses You Can Deduct

Having a solid understanding of your property’s common expenses is critical to optimizing your cash flows. It can also benefit you at tax time because you can deduct most of them on your return. Budget expenses that are also tax-deductible include:

  • Repairs and maintenance. Anything you render to maintain the condition of your property is typically a deductible expense. This includes fees paid to service providers, contractors, and more. Keep in mind that improvements – mainly large ones – are not deductible as expenses. Due to this, they need to be amortized as capital improvements instead.
  • Insurance. Insurance premiums for your landlord insurance policy, including any fire, flood, or personal liability insurance, are deductible expenses.
  • Utilities. You can deduct utility payments on your tax return if you spend on any utility service, including water, garbage, electric, or gas. Utilities paid by your tenants are not deductible.
  • Advertising. Any money you spend to market your property and/or find a new tenant is a deductible amount. This covers the cost of a web domain or website hosting, online ads, and professional fees for photography or video tours.

Additional Tax Deductions

Not only common expenses, but there are also several other deductions that rental property owners may take to help reduce their tax liability. Among these tax deductions are:

  • Mortgage interest. Any mortgage interest you pay on related loans is tax-deductible for investment properties. This is commonly one of the most beneficial deductions for rental property owners.
  • Depreciation. Another amazing deduction that rental property owners can take is depreciation. All properties are inclined to depreciate over time due to wear and tear. The good thing is that you can deduct a certain amount for this depreciation over the life of the property. You can also receive depreciation on capital improvements, such as appliances, fences, and renovations.
  • Legal and professional fees. Just like you can deduct expenses paid for repair work or landscaping, you may also deduct expenses made to attorneys or other professionals who provide services related to the management of your rental property. The majority of costs associated with eviction, Santa Clara property management, and tax preparation are also deductible.
  • Travel. Owning rental properties often takes a lot of back-and-forth travel, whether you dwell in another state or only a few miles away. Those business-related miles can add up over a year and are deductible on your tax return. Just keep a log of your travel miles and any other travel-related expenses.

To take full advantage of all the deductions awarded to you, you must keep your property-related expenses organized and in one place. And there’s no need to wait until tax season; you can start keeping track of your expenses immediately and add as you get further. Doing it in this manner will simplify your work every year when tax season comes around.


Choosing Real Property Management Southern Utah to watch over your operational expenses is another method to make tax time simpler. In addition to professional property management, we keep in touch with your property’s income and expenses and provide reports that can make tax time much more straightforward. Contact us online to learn more!

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