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What are the Different Types of Rental Property Tax Deductions?

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  • Written By: Lainie Petersen
  • Edited By: Melissa Wiley
  • Last Modified Date: 26 November 2016
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Landlords may be able to take certain rental property tax deductions to improve the profitability of their business. Types of rental property tax deductions depend significantly on the jurisdiction in which the landlord operates his business. Common tax deductions for landlords include regular business expenses such as travel and the cost of maintaining an office, interest paid on loans for the purchase and maintenance of property, and insurance. Property depreciation, local taxes, and employee costs may also qualify as rental property tax reductions.

In the United States, landlords who purchase a property may be able to deduct the purchase price over many years as depreciation. In addition, a landlord may also deduct the cost of repairs to the building. A landlord in the United Kingdom has the choice of taking either a standard wear-and-tear allowance or deducting replacement costs each year. Landlords in the United States may annually deduct the cost of making ordinary, necessary, and reasonable repairs. A landlord who pays interest on a mortgage loan or on a credit card purchase may be able to count these as rental property tax deductions.

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The expenses of being a professional landlord may also be deductible. For example, if a landlord regularly engages in short- or long-term business travel, she may be able to deduct those expenses, such as airfare, hotel stays, and driving, from her taxes. These expenses may include the cost of driving to her properties or consulting with tenants. In the United States, the cost of operating a vehicle in support of a business can be deducted in one of two ways. The landlord may deduct his actual expenses, which he can calculate by saving receipts from gas stations and logging his trips. He can alternatively take a standard deduction based on the number of miles he drives in support of his business.

Other expenses that may be deductible include that of hiring professional advisors such as accountants or lawyers or purchasing various types of insurance to protect a property. Landlords who maintain an office, even in their own home, can often deduct its costs from their taxable income. The formula for deducting office expenses, particularly home-office expenses, can be complex, so landlords may wish to consult with a tax attorney or accountant before taking their office costs as rental property tax deductions. Landlords with employees may be able to take significant deductions on any contributions made toward employee insurance or other benefits.

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