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What rental property expenses can I deduct?

Article ID: 63
Last updated: 13 Jan, 2013
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By Jason Watson ()

There are several expenses that are associated with your rental property that you are allowed to deduct. There are obvious ones such as advertising costs, mortgage interest, utilities, depreciation, etc. But there are also ones that are more obscure.

Vehicle expenses and home office deductions are often overlooked. However if you travel to Home Depot to pick up a new faucet or go to WalMart to grab some window cleaner, you can deduct your miles in conjunction with the ownership of your rental property. Yet if you travel to Home Depot because you are updating a kitchen, those miles become a part of your depreciable improvement (see How are repairs and improvements different?).

The IRS uses two rules for determining if an expense is deductible- in general, you may deduct ordinary and necessary expenses for conducting a trade or business. An ordinary expense is an expense that is common and accepted in the rental business. A necessary expense is one that is appropriate for rentals.

If you use a dedicated room in your home to manage your rental property you can deduct that as well- it gets a bit tricky if you use a management company. Other expenses such as cell phones and internet access are also fringe expenses that most taxpayers miss. Download our Rental Property Worksheet for more comprehensive list of allowed deductions.

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item How are repairs and improvements different?
item Can I deduct the taxes associated with public improvements?

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