Rental Property Tax Deductions Checklist for Bethesda Area Landlords

AW Manage serves the Bethesda, Montgomery County and the Washington DC Metro area.

Owning rental property makes good financial sense for a lot of reasons. Your investment will earn you excellent returns, especially when you buy the right home in the right location and rent it out to the right tenants. Many private landlords forget that there are also tax benefits to owning rental property. Take advantage of these deductions on your investment home.

Repairs and Maintenance on Your Rental Property

Anything you spend to maintain your investment is tax deductible. When you make repairs during tenant turnovers, or you fix an air conditioning system that isn’t working or replace a furnace, you can deduct those expenses for the tax year that you complete them. It’s important to keep good records. When you work with a professional management company, you should receive a monthly statement that shows your income and expenses. This will help you stay organized when you’re adding up what you spend to maintain your investment home. You cannot deduct improvements or upgrades; only maintenance.

Professional Services, Fees, and Commissions

If you’re a private landlord managing your own property because you don’t want to spend money on professional management services, you’re missing out on a huge tax deduction. Professional management services are tax deductible. You can also deduct the amount you pay to your lawyers, real estate agents, accounting professionals, insurance agents, and any other individual or company that provides professional advice or services pertaining to your property.

Rental Property Depreciation

The IRS will allow you to depreciate your property, which translates to major tax savings for investment property owners. The government attaches 27.5 years as the expected “useful life” of a property. So, you can divide the value of your property by 27.5 and deduct the amount of that depreciation.

Mortgage Interest and Association Dues

If you’re paying a mortgage on your rental property, you can deduct the interest that you pay. You can also deduct any homeowner’s association or condo association dues. Insurance premiums are tax deductible, too, as are property taxes.

Travel Expenses and Advertising

If you live out of the area or even out of state, you’ll need to travel back and forth to your rental property, especially when you’re placing a tenant. You can deduct your travel expenses, whether it’s a simple car ride across town or the cost of a plane ticket. You can also deduct any money you spend advertising your home.

There are a lot of things that private landlords can write off at tax time. Talk to a professional property manager and your tax professional to be sure you’re compliant and taking advantage of all possible deductions. If you have questions or need help, please contact us at AW Manage.