rental property tax deductions

Tax Time is Here Again- Rental Property Tax Deductions You Need To Know

Being a landlord is a lot of work, but it also offers some of the most effortless rental property tax deductions compared to any other investment opportunity!

If you like collecting a rent check every month, you are going to love the tax deductions available to you as a Sioux Falls rental property owner.
Some of the most common rental property tax deductions include the following.

Common Deductions

  • Costs of advertising and marketing for the home
  • Cleaning fees paid to professional companies before a new tenant moves in
  • Fees paid to a professional property management company for managing or leasing the home
  • Premiums paid for fire, theft, flood, liability, employee health and workers compensation insurance
  • Legal and professional fees paid to attorneys, real estate investment advisors, and accountants
  • Interest paid on the mortgage and credit cards used for the rental home
  • Utilities paid by you as the landlord

Less Common Deductions

As the leader in property management, Real Property Management Express in Sioux Falls has put together a list of rental property tax deductions that are not so obvious and are frequently overlooked by landlords. These deductions could be the difference between you making a profit on the rental property and losing money.

Local Travel Expenses

Driving by your rental property for an inspection or to the hardware store to pick up the parts you need to fix that leaking faucet? Keep track of the miles driven in your car, these can be deductions in one of two ways:

  1. Use the exact amount paid (for gas, upkeep, and repairs on the vehicle).
  2. Use the standard mileage deduction as determined by the IRS. ($0.54 per mile for 2016)

Cost of Repairs

This is one area that Sioux Falls property managers need to be careful in, as the IRS classifies repairs and improvements as different categories. Repairs are defined as anything that keeps the property in good working order, such as replacing a broken window or fixing a leaky kitchen sink. However, if you instead choose to replace all windows with energy efficient glass, this is an improvement that will extend the life of the property over the years. Your costs of repairs are deductible, however, the costs associated with improvements must instead be depreciated.


Landlords can recover the cost associated with purchasing real estate by claiming depreciation. It that allows them to deduct a small portion of the costs over a period of many years. Depreciation starts when the home is ready for rent, even if tenants are not living in it. It stops either when you have recovered the cost of the home or you stop it.

Casualty & Theft

When a natural disaster damages your rental property, you may be able to deduct a portion of your loss.  You can determine the amount deductible by calculating the difference between the property damage and the loss covered by your insurance.

If you have questions about the rental property tax deductions available to you, feel free to give Real Property Management Express in Sioux Falls a call. We will be happy to assist you!