Landlord tax deductions
Updated 2026-09-04 · 10 min read
27.5 years
The recovery period for residential rental property under the general depreciation system — IRS Pub. 527, Table 2-1, checked 2026-09-04.
Rental income is reported on Schedule E, and the deductions against it are broader than most self-managed landlords claim. The two that cause trouble are depreciation, which people underclaim, and repairs, which people misclassify.
The lines a small landlord actually uses
- Mortgage interest — the interest, never the principal.
- Property tax and insurance.
- Repairs and maintenance, in the year paid.
- Management, legal and professional fees.
- Advertising and tenant screening costs.
- Utilities you pay, supplies, and HOA dues.
- Travel to the property, at the standard rate, with a log.
- Depreciation — the largest, and the most often left blank.
The screening fee cuts both ways
What you spend on a report is deductible; what the applicant pays you is income. Keep the two sides on the ledger — see the rental application template for the fee mechanics.
Repairs against improvements
A repair keeps the property in ordinary operating condition and is deducted this year. An improvement betters it, restores it or adapts it to a new use, and is capitalised and depreciated. Patching a roof is a repair; replacing it is an improvement.
| Repair (this year) | Improvement (capitalised) |
|---|---|
| Fixing a leaking tap | Re-plumbing the bathroom |
| Patching drywall | Removing a wall |
| Servicing the furnace | Replacing the furnace |
| Repainting one room | Full interior refit after a gut |
The distinction is a matter of degree and the safe-harbour thresholds change; take the marginal cases to a preparer.
Depreciation is not optional in the way people think
Residential rental property depreciates over 27.5 years under GDS (IRS Publication 527, Table 2-1, checked 2026-09-04), land excluded. At sale, the amount allowed or allowable is recaptured — which means the tax is charged whether or not you actually claimed it.
So not claiming depreciation loses the deduction and keeps the recapture. Work the figure with the depreciation calculator and put it on the return.
The records that make it stick
- 01A separate bank account for the property, used for everything.
- 02The rent ledger reconciled monthly against that account.
- 03Invoices filed by property and year, with a note on the ones that are improvements.
- 04A mileage log with dates and purposes, not a year-end estimate.
- 05The closing statement from purchase, which sets your basis.
This page is not tax advice
It describes where the lines are, not what your return should say. Rules change annually and the marginal cases are genuinely marginal — take them to a preparer with the file above in hand.