Landlord Tax Deductions: What You Can Write Off in 2025
Knowing which expenses are deductible can dramatically improve your rental property ROI. This in-depth 2025 guide covers deductible categories like mortgage interest, depreciation, repairs vs. improvements, professional services, travel, home office, and more. Learn how to document expenses properly, avoid common IRS pitfalls, and plan ahead to reduce your tax burden without risking an audit.
Karen Patel
Smart tax planning can add thousands to your bottom line every year. The key is understanding which costs are deductible, how to categorize them, and how to keep airtight records.
1. Common Deductible Expenses
- Mortgage interest on rental property loans
- Property taxes and insurance premiums
- Utilities paid by the landlord
- HOA fees and property management fees
- Advertising and tenant screening costs
- Professional services (legal, accounting, tax prep)
2. Repairs vs. Improvements
Repairs restore something to its original condition and are deductible in the year paid. Improvements add value or extend life and are capitalized and depreciated.
Examples: fixing a leak (repair) vs. replacing the roof (improvement).
3. Depreciation Basics (MACRS)
Residential rental property is depreciated over 27.5 years, excluding land. Large improvements (HVAC, roof, windows) can be depreciated on their respective schedules.
4. Travel and Home Office
Track miles for property-related trips and keep receipts for airfare, lodging, and meals when applicable. A legitimate, regularly used home office can also be deductible.
5. Recordkeeping and Audit Readiness
Maintain digital copies of invoices, bank statements, and lease documents. Use accounting software or a property management platform to categorize expenses monthly.
FAQs
Can I deduct renovations done between tenants?
Yes, but classify correctly. Cosmetic touch-ups are often repairs; major upgrades are improvements and must be depreciated.
What if I occasionally use the property personally?
Mixed-use rules apply. Keep usage logs and consult your tax advisor to allocate expenses accurately.
“The best tax strategy is consistent documentation and clear categorization throughout the year.”
About Karen Patel
CPA focused on real estate investors and small landlords.