Common Rental Real Estate Expenses

Mortgage Interest

The amount you pay in principle each year cannot be deducted from your income when figuring your tax liability. If you have a seller financed mortgage you must have the name, address and social security of the seller to report.

Real Estate Tax

Taxes are reported in the year paid, not the year they are applied to.

Cleaning and Repairs

Amounts for supplies and labor are deductible.

Improvements

Major repairs such as remodeling or replacing a furnace are not included as rental expenses. These costs can be depreciated over a long period of time as improvements.

Utilities

This includes utilities directly paid or paid by the management company on your behalf, not amounts paid by tenants.

Commissions

Amounts paid to a management company. If paid to an individual a 1099 form will need to be issued if the amount paid in the year is over $600.

Legal Expenses

Legal expenses related to a refinance or purchase must be amortized over a period of time.

Cost for tax preparation of the rental return (Schedule E)

Also includes, depreciation and mileage worksheets, and any other forms related to tax computation of the rental income.

Home Care Services

Payments for home security, cleaning service, and yard maintenance are deductible.

Supplies

Items such as rental contracts and receipts.

Rental furniture and appliances

Amounts paid can usually be depreciated over 5 years.

Homeowner’s insurance

Includes fire, flood and liability insurance. Does not include auto insurance.

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HOA dues

Homeowner association dues include special assements and maintenance charges.

Bank Fees

Penalty charges, such as overdraft fees, are not deductible.

Mileage

Including roundtrip — home to rental property, and for bank, errands, etc.