Rental Property Tax Deductions Checklist

What are the different rental property tax deductions categories? Learn how to maximize your allowable tax deductions for rental property today.

1. Mortgage Interest and Credit Card Interest

If you took a mortgage loan to pay for your rental property (which most people do), the interest owed on your mortgage payments is tax deductible. This, together with your rental property depreciation (see below) will typically make up the bulk of your tax deductions.

On top of this, the interest on all rental property-related loans are also tax detectible - such as a bank loan to pay for property improvements or credit card charges to purchase goods and services for the rental property.

2. Rental Property Depreciation

This is a rental property tax deduction rule that only applies to investment property. Homeowners cannot claim depreciation as a tax deduction.

If you live on your property but rent out a portion of it to others (i.e. a resident landlord), you can claim a partial tax deduction for rental property. For example: You stay with your parents and two other tenants. If you rent out 40% of your property, then you're allowed to claim up to 40% of its depreciation as a tax deduction.

In the United States, residential rental property is depreciated over 27.5 years.

For example: You bought a rental home in the U.S. for $300,000. In your case, your annual tax deduction for depreciation would be $10,909 (300,000 / 27.5) - Click here to learn what is rental property depreciation and how to calculate it.

3. Property Repair and Maintenance Costs

Any expenses that you spend on rental property maintenance and repairs are also tax deductible - This includes costs of maintaining your rental property in a habitable condition and the repairing normal wear and tear damage.

It's important to note that property improvements and renovation are not tax deductible - All repairs have to be necessary and reasonable.

Examples of tax deductible property repairs include repainting wall repainting, fixing plumbing and leaks, repairing damaged roofing and replacing broken windows. For more details and examples, Click here for our guide to normal wear and tear.

4. Costs of Hiring Real Estate Professionals

If you hire third party help for your rental property or rental business, all wages and expenses paid can be included in your tax deduction calculations.

This includes the costs incurred from hiring real estate agents, contractors, property inspectors, property managers,accountants and real estate lawyers.

NEXT: More Examples of Rental Property Tax Deductions