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An Owner’s Guide to Rental Property Tax Deductions

Bowling Green Rental Property Owner Doing Her TaxesOne of the biggest advantages of owning Bowling Green rental properties is that, come tax time, you can take advantage of deductions that other taxpayers cannot. But to benefit from these deductions, you have to find out what they are and how to get your numbers ready before you start filling out your return. In this guide, we will discover the tax deductions that rental property owners can take 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 key to optimizing your cash flows. It can also benefit you at tax time since you can deduct most of them on your return. Budget expenses that are also tax-deductible include:

  • Repairs and maintenance. Anything you purchase to maintain the condition of your property is usually a deductible expense. This includes fees paid to service providers, contractors, and so forth. Keep in mind that improvements – mostly large ones – are not deductible as expenses. Instead, they need to be amortized as capital improvements.
  • 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 subscribe to any utility service, for example, 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 involves if you spend on a web domain or website hosting, online ads, and professional fees for photography or video tours.

Additional Tax Deductions

Aside from common expenses, there are a few other deductions that rental property owners can take to help reduce their tax liability. The following is the list of tax deductions:

  • Mortgage interest. Any mortgage interest you pay on related loans is tax-deductible for investment properties. This is often one of the most beneficial deductions for rental property owners.
  • Depreciation. Another major deduction that rental property owners can claim is depreciation. All properties are bound to depreciate over time due to wear and tear. The advantage is that you can deduct a certain amount for this depreciation over the life of the property. You can also take 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 can also deduct expenses paid to attorneys or other professionals who conduct services related to the management of your rental property. Most costs associated with eviction, Bowling Green property management, and tax preparation are also deductible.
  • Travel. Owning rental properties often involves a lot of in and out travel, whether you are in another state or only a few miles away. Those business-related miles can accumulate over a year and are deductible on your tax return. Just keep a log of your travel miles and any other travel-related expenses.

It is necessary to keep your property-related expenses organized and in one place if you want to take full advantage of all the deductions provided to you. And there’s no need to wait until the end of each year; you can start keeping track of your expenses immediately and increase them as you go. Doing so can make your experience easier per annum when tax season comes around.


One more alternative to make tax time smoother is to collaborate with Real Property Management Clarity Team to record your operational expenses. Aside from professional property management, we keep an eye on your property’s income and expenses and provide reports that can make tax time more convenient. Contact us online to learn more!

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