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An Owner’s Guide to Rental Property Tax Deductions

El Cerrito Rental Property Owner Doing Her TaxesOne of the key advantages of owning El Cerrito rental properties is that, come tax time, you can take advantage of deductions that other taxpayers cannot. Yet, to benefit from these deductions, you need to determine what they are and how to have your numbers ready before you begin filling out your return. In this guide, we will explain the tax deductions that rental property owners can use and how they can help reduce your tax liability each year.

Common Expenses You Can Deduct

Possessing a solid knowledge of your property’s common expenses is vital to optimizing your cash flows. It may also assist you at tax time so that you can deduct most of them on your return. Budget expenses that are also tax-deductible are:

  • Repairs and maintenance. Everything you give out to maintain the condition of your property is always a deductible expense. This incorporates fees paid to service providers, contractors, etc. It’s important to know that improvements – mostly huge ones – are not deductible as expenses. Instead, they should 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 spend on 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 includes costs for a web domain or website hosting, online ads, and professional fees for photography or video tours.

Additional Tax Deductions

Besides common expenses, there are some other deductions that rental property owners may pursue to help reduce their tax liability. The following tax deductions are:

  • Mortgage interest. Any mortgage interest you pay on related loans is tax-deductible for investment properties. This is often one of the most desirable deductions for rental property owners.
  • Depreciation. Another amazing deduction that rental property owners can take is depreciation. All properties start to depreciate over time due to wear and tear. The plus point is that you can deduct a certain amount for this depreciation over the life of the property. You can also acquire depreciation on capital improvements, such as appliances, fences, and renovations.
  • Legal and professional fees. Just like you may deduct expenses paid for repair work or landscaping, you can also deduct expenditures given to attorneys or other professionals who deliver services related to the management of your rental property. Many costs associated with eviction, El Cerrito property management, and tax preparation are also deductible.
  • Travel. Owning rental properties often takes a lot of back and forth travel, whether you reside in another state or only a few miles away. Those business-related miles may 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’s necessary to keep your property-related expenses organized and in one place if you prefer to take full advantage of all the deductions accessible 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 maximize them as you go along. Doing it this way can make your life simpler annually when tax season comes around.


Another technique to make tax time trouble-free is to engage with Real Property Management Pacific to keep track of your operational expenses. In addition to professional property management, we keep track of your property’s income and expenses and provide reports that can make tax time significantly simpler. Contact us online to learn more!

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