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An Owner’s Guide to Rental Property Tax Deductions

Wayzata Rental Property Owner Doing Her TaxesAmong the main advantages of owning Wayzata rental properties is that, come tax time, you can take advantage of deductions that other taxpayers cannot. However, to benefit from these deductions, you should initially realize what they are and how to have your numbers ready before you proceed with filling out your return. In this guide, we’ll mention the tax deductions that rental property owners can acquire and how they can help reduce your tax liability per year.

Common Expenses You Can Deduct

Having a strong understanding of your property’s common expenses is critical to optimizing your cash flows. It can also support you at tax time because you can deduct most of them on your return. Budget expenses that are also tax-deductible are:

  • Repairs and maintenance. Usually, whatever amount you spend to maintain the condition of your property is a deductible expense. This covers fees paid to service providers, contractors, etc. Remember that improvements – mainly significant 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 pay for 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 covers the expenditures on a web domain or website hosting, online ads, and professional fees for photography or video tours.

Additional Tax Deductions

Along with common expenses, there are several other deductions that rental property owners can take to help reduce their tax liability. The following are illustrations of tax deductions:

  • Mortgage interest. Any mortgage interest you pay on related loans is tax-deductible for investment properties. This is usually one of the most valuable deductions for rental property owners.
  • Depreciation. Another significant deduction that rental property owners can utilize is depreciation. All properties tend to depreciate over time due to wear and tear. The great news is that you can deduct a certain amount for this depreciation over the life of the property. You can also deduct depreciation on capital improvements, such as appliances, fences, and renovations.
  • Legal and professional fees. Just like you can deduct expenses paid for repair work or landscaping, you can also deduct cash paid to attorneys or other professionals who furnish services related to the management of your rental property. Most costs associated with eviction, Wayzata property management, and tax preparation are also deductible.
  • Travel. Owning rental properties typically takes a bit of back-and-forth travel, whether you dwell in another state or only a few miles away. Those business-related miles can add up throughout the year and are deductible on your tax return. Just keep a log of your travel miles and any other travel-related expenses.

You need to keep your property-related expenses organized and in one place to take full advantage of all the deductions provided to you. Moreover, 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 this in this manner can make your life uncomplicated annually when tax season comes around.


One more alternative to make tax time easier is to work with Real Property Management Viking to keep track of your operational expenses. Apart from professional property management, we will monitor your property’s income and expenses and provide reports to make tax time much simpler. Contact us online to learn more!

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