6 Tax Advantages of a Rental Property Owner

As the old saying goes the only thing certain in life is death and taxes. However, as the owner of a rental property, this may not be accurate. Real estate investments are the single most tax advantaged investment out there, and many property managers are not taking advantage of the deductions available to them.

Since our goal as the leader in property management in Sioux Falls is to give the property owner the best ROI, we have compiled a list of tax deductions available that are often overlooked. Taking advantage of deductions from this list may make the difference between you making money on your rental property and losing it.


Mortgage Expenses

This is a common one that most rental real estate owners are aware of: you are able to deduct the interest paid on your mortgage loan, and sometimes even the loan origination fees, and any money used to buy down points.


Repair Expenses

If the repair is necessary to keep the rental home in good working order (replacing a broken window, fixing a leaky faucet) the entire cost of the repair can be used as a deduction in the year that it happened. If the repair is classified as an improvement to the home (upgrading to energy efficient windows, replacing the entire roof) it will need to be depreciated in value over time.



This is a deduction often overlooked by rental property owners. The cost of the rental building can be depreciated over a period of 27 1/2  years on a residential building and 39 years on a commercial building. Depreciating the building over time allows you to recoup the cost of obtaining it, and can be the difference between taxable rental income and taking a loss on the property.


Travel Expenses

Are you carefully training your travel expenses when going on rental business? Whether it is driving by the home or going to resolve a tenant complaint, miles spent driving on officially rental business are able to be deducted. Refer to the IRS website (www.irs.gov) for more information on how to deduct these expenses.

Insurance Premiums

This is another area that benefits rental property owners and not homeowners. If you are renting the property, you are able to deduct premiums paid for fire, theft, flood, liability, employee health insurances and workers compensation.


Property Management & Legal Fees

If you have hired one (or many) property management companies in Sioux Falls to assist you in maintaining the rental property, the fees paid are deductible as a business expense. The same goes for any fees paid to a lawyer to help with evictions, lease agreements and any other rental business related activity.