November 10, 2026

Rental Property Tax Deductions Landlords Miss (and How to Track Them)

Key Takeaways

Almost every dollar you spend because you own a rental is deductible: mortgage interest, insurance, repairs, property taxes, and the less obvious items below.
Depreciation is the big one most new owners miss. The building (not the land) is written off over 27.5 years, and it costs you nothing out of pocket.
Property management fees, mileage, professional fees, advertising, screening, and owner-paid utilities and upkeep are all rental expenses.
Repairs are deducted in the year you pay for them; improvements, like a new air conditioner, are depreciated over several years.
Keep rental money in a separate account and card, and every expense in one system, so tax time is a report instead of a shoebox.

Every year, landlords leave money on the table. Not on purpose, but because they don't know every deduction available to them. As our CEO, Brian Mullins, puts it: "I don't know about you, but I don't like giving money to the government."

We have this conversation with owners every year, and Brian walked through it in a recent video. Here's the list, with a few details checked against IRS Publication 527, the IRS guide for residential rental property.

A disclaimer first: Brian isn't a CPA, and this isn't tax advice. These deductions are well documented by the IRS, but every owner's situation is different, so review your return with your CPA.

The Deductions You Probably Already Know

Mortgage interest, property insurance, property taxes, and repairs are all deductible. The general rule: if you spent it because of the property, and you wouldn't have spent it otherwise, it's likely a rental expense. The small items add up, so track them all.

1. Depreciation

Brian's college finance professor liked to say, "Nobody writes a check to Mr. Depreciation." Depreciation is a non-cash expense: it lowers your taxable rental income without costing you anything out of pocket that year.

A residential rental building is depreciated over 27.5 years, starting when the home is placed in service, meaning ready and available for rent. Two details that trip owners up:

Land isn't depreciable. Only the building's share of what you paid counts. If you buy a house for $150,000 and the land is worth $30,000, you depreciate $120,000: about $4,364 a year.
Depreciation comes back when you sell. The depreciation you took (or were allowed to take) is generally taxed when you sell, at up to 25%. It's still valuable, since you get the benefit now and pay later, often at a lower rate, but plan for it.

There are also ways to speed depreciation up. A cost segregation study, for example, identifies parts of a property that can be written off faster than 27.5 years. It front-loads the deduction (so you run out sooner), and the study itself has a cost, so it's a conversation for your CPA rather than a default.

2. Property Management Fees

Every fee your property manager charges is a rental expense: the monthly management fee, leasing fees, renewal fees, and whatever else is on the statement. (We keep ours simple, $79 plus a percentage of rent, and our guide to property management fees covers what else to look for.)

3. Travel and Mileage

Driving to your rentals to check on them, meet a vendor, or handle a showing counts. Log those miles; an app makes it easy.

You can generally deduct either the IRS standard mileage rate (70 cents a mile for 2025; the IRS sets it each year) or your actual vehicle costs. Brian's rule of thumb: with an economical car, the standard rate usually wins; with a more expensive vehicle used heavily for your rentals, actual costs may come out ahead. Either way, the logbook is what makes the deduction stand up.

4. Professional Fees

What you pay your CPA, attorney, and other professionals for your rental business is deductible. That can include the legal work to set up the LLC that holds your rentals, even though the LLC didn't exist yet when you hired the attorney. Start-up and organization costs have their own rules (some are deducted right away and the rest spread over several years), so flag them for your CPA.

5. Advertising and Screening Costs

Listing fees, yard signs, photography, and tenant screening costs you pay are all rental expenses. Much online advertising is free when you self-manage, but the signs and small costs still add up over a year.

6. Upkeep and Owner-Paid Utilities

Lawn care, trash service, pest control, and any utilities you pay for the rental are deductible. When Brian started out, he set up utilities in his own name because it was easier than putting them in a company name. That's fine, as long as you pay them from your rental account so the expense is clearly tied to the property.

Repairs vs. Improvements

This is the distinction that matters most at tax time:

Repairs keep the home in working order: fixing a leaky sink, replacing a garbage disposal, patching drywall. You deduct them in the year you pay for them.
Improvements add value or extend the life of the home, like replacing the air conditioner, the roof, or the flooring. They're depreciated over time instead.

Different improvements have different schedules. Under the IRS's standard system, appliances, carpeting, and furniture in a residential rental are depreciated over 5 years, while structural parts of the building, like a new HVAC system or roof, generally follow the building's 27.5 years. The IRS also has a de minimis safe harbor that lets many owners deduct lower-cost items right away instead of depreciating them. Ask your CPA whether it applies to you.

How to Make Tax Time Easy

Use a separate bank account for each rental business, so nothing gets mixed with personal spending.
Put expenses on a dedicated business credit card. Brian runs his own rentals this way; the statement becomes your expense log.
Keep everything in one system, whether QuickBooks or a spreadsheet, and attach receipts as you go, so they're there if you're ever audited.

For the owners we manage, we run as many expenses as possible through our own accounting. At year-end, owners get one statement of income and expenses they can hand straight to their CPA, instead of digging through a year of receipts.

Bottom Line

Take every expense the rules allow: anything you spent because you own the property is likely deductible, and depreciation is the special one because it costs you nothing in cash. Track it all in one place, know the difference between a repair and an improvement, and review it with your CPA before you file.

If keeping up with the bookkeeping sounds like a headache, that's part of what we do for owners across the Oklahoma City metro. Book a free consultation to see how it works.

Frequently Asked Questions

Can I deduct my property management fees?

Yes. Management fees, leasing fees, renewal fees, and other charges from your property manager are rental expenses for the property they manage.

How much depreciation can I take on a rental house?

Residential rental buildings are depreciated over 27.5 years from when they're placed in service. Divide the building's value (your cost minus the land) by 27.5. For a $120,000 building value, that's about $4,364 a year, prorated in the first year.

Is a new air conditioner a repair or an improvement?

Replacing an air conditioner is generally an improvement, so it's depreciated over time rather than deducted all at once. Fixing an existing unit, like replacing a capacitor or recharging refrigerant, is usually a repair you deduct in the year you pay for it.

Do I have to pay back depreciation when I sell?

Generally, yes. Depreciation you took (or were allowed to take) on a rental is taxed when you sell, at a maximum rate of 25% for this kind of gain. Your CPA can help you plan for it, including options like a 1031 exchange.