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An Owner’s Guide to Rental Property Tax Deductions

Blackfoot Rental Property Owner Doing Her TaxesAmong the most significant advantages of owning Blackfoot rental properties is that, come tax time, you can make the most of deductions that other taxpayers cannot. However, before you begin filling out your return to benefit from these deductions, you must first learn what they are and how to have your numbers ready. In this guide, we will talk about 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

Having a strong grasp of your property’s common expenses is key to optimizing your cash flows. It can also help 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. Typically, every amount you spend to maintain the condition of your property is a deductible expense. The fees paid to service providers, contractors, and others fall under this category. You need to know that improvements – particularly 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 spend on any utility service, such as 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 if you pay for a web domain or website hosting, online ads, and professional fees for photography or video tours.

Additional Tax Deductions

There are a couple of other deductions that rental property owners may claim in addition to common expenses to help reduce their tax liability. The following is a checklist 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 useful deductions for rental property owners.
  • Depreciation. Another big deduction that rental property owners can take is depreciation. All properties are prone 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. You may deduct money paid to attorneys or other professionals who execute services related to the management of your rental property, just as you can deduct expenses paid for repair work or landscaping. Most costs associated with eviction, Blackfoot property management, and tax preparation are also deductible.
  • Travel. Owning rental properties often involves a lot of back-and-forth travel, whether you live in another state or only a few miles away. Those business-related miles can tally 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.

It’s imperative to keep your property-related expenses organized and in one place if you like to take full advantage of all the deductions given to you. You don’t have to wait until the end of each year; you can start keeping track of your expenses immediately and add as you go along. Doing it this way can make your life easier every year when tax season comes around.


Working with Real Property Management Pocatello to keep an eye on your operational expenses is another alternative to make tax time simpler. In addition to professional property management, we keep track of your property’s income and expenses and provide reports that can make tax time much more manageable. Contact us online to learn more!

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