What Rental Expenses Can You Deduct as a Landlord?

All tax deduction should be regarded as a matter of legislative grace, meaning that they can be performed only if one or more of the tax laws explicitly allow it.

Usually, landlords can deduct three broad categories of rental expenses:

  1. Start-up expenses

  2. Operating expenses

  3. Capital expenses

Tellus TIP:

In most cases, you are not required to indicate in the tax return form which tax law clause entitles you to take a specific deduction. However, if you are audited by the Internal Revenue Service (IRS), you will be required to provide a legal basis for each deduction you make. Therefore, if the IRS concludes that your deduction cannot be justified, it can refuse your deduction and charge you not only taxes but also penalties. In summary, read the law carefully before you decide to make a deduction.