The tax code is actually generous to rental property owners, if you know how to use it. We're talking deductions that can wipe out your taxable income entirely. But every year, landlords hand the IRS money they didn't owe because they missed something, miscategorized an expense, or just didn't keep good records.
This guide covers every deduction available for the 2025 tax year (filed in 2026), organized by category. Treat it as a checklist. Go through it before you hand anything to your CPA.
The big five: deductions every landlord should know
1. Mortgage interest
For most landlords, this is the single largest line item on Schedule E. The interest portion of your mortgage payment is fully deductible, and in the early years of a 30-year loan, you're looking at roughly 70 to 80% of each payment going to interest. That's real money.
Your lender will send Form 1098 every January showing exactly what you paid. That number goes straight to Schedule E, Line 12. Don't overthink it.
2. Property taxes
Here's something a lot of landlords don't realize: the $10,000 SALT cap does not apply to rental property taxes. That cap is for itemized personal deductions. Rental property taxes are a business expense on Schedule E, Line 16, fully deductible regardless of whether you take the standard deduction on your personal return.
3. Depreciation
Depreciation is the deduction that makes real estate so tax-efficient. You're writing off the cost of the building over 27.5 years, straight-line, even while the property may be going up in value. It's a paper loss that reduces your taxable income with zero cash outlay.
The math: take your total cost basis (purchase price plus closing costs plus improvements), subtract the land value, divide by 27.5. On a $250,000 depreciable basis, that's $9,090 per year. Every year. Without writing a check.
Tip: Do not skip depreciation because you think your property is appreciating. The IRS will recapture depreciation at sale whether or not you claimed it. If you're going to owe the tax either way, take the deduction now.
4. Insurance premiums
Every insurance policy tied to your rental goes on Schedule E, Line 9, landlord property insurance, liability coverage, umbrella policies, flood, earthquake. If you have a bundled policy covering both your home and your rental, you'll need to allocate the rental portion. Keep that documentation.
5. Repairs and maintenance
Anything that keeps the property in its current condition is immediately deductible on Schedule E, Line 14. Leaky faucet, cracked drywall, broken window, fresh paint, HVAC tune-up, pest control, all of it.
The line to understand: repairs maintain, improvements add value. Swapping out a broken toilet is a repair. Gutting and rebuilding the bathroom is an improvement, you'll capitalize that and depreciate it. Getting this wrong is one of the most common audit triggers for landlords.
Commonly overlooked deductions
6. Travel and mileage
Every legitimate business trip to your rental is deductible. The 2025 IRS standard mileage rate is 70 cents per mile. Drive 2,500 miles a year for property-related trips and you've got $1,750 in deductions sitting there. Most landlords never claim this because they don't track it.
Qualifying trips include inspections, contractor meetups, supply runs, tenant showings, and picking up rent in person. Keep a mileage log, date, destination, purpose. A note in your phone works fine if you're consistent about it.
7. Professional and legal fees
CPA fees, attorney fees for lease reviews or evictions, and property management company fees (typically 8 to 12% of collected rent) all go on Schedule E, Line 10. And yes, the portion of your tax prep fee attributable to Schedule E is deductible too. Ask your preparer to break it out.
8. Advertising and tenant screening
Zillow listings, Apartments.com fees, yard signs, listing photography, background checks, credit reports, deductible on Schedule E, Line 5. If you paid for it to find or vet a tenant, it counts.
9. Home office deduction
Got a dedicated space where you manage your rentals? It has to be used exclusively and regularly for that purpose, but if it qualifies, you can deduct either $5 per square foot (simplified method, up to 300 sq ft) or a percentage of your actual home expenses. Schedule E, Line 19. Worth looking into if you're actively managing multiple units.
10. Utilities
Any utilities you cover as the landlord are deductible on Schedule E, Line 17. Water, sewer, trash, electricity and gas during vacancy periods, landscaping, snow removal, and internet or cable if it's included in the lease.
11. Loan origination fees and points
Unlike a primary residence, points on a rental property mortgage can't be deducted all at once. You amortize them over the life of the loan, on a 30-year mortgage, that's 1/30th per year. Small amount annually, but landlords constantly forget about it after year one. Don't be one of them.
12. Closing costs
Some closing costs from purchase are deductible; others get added to your cost basis. Title insurance, recording fees, and transfer taxes increase your depreciable basis, which means a higher annual depreciation deduction going forward. Prepaid property taxes and mortgage interest paid at closing are deductible in the year you paid them.
13. Software and subscriptions
Property management software, accounting tools, landlord association memberships, real estate education directly tied to your rental business, all deductible on Schedule E, Line 19. This includes tools like SealedFolio, Quicken, or whatever you're using to track your numbers.
14. Cleaning and supplies
Turnover cleaning, light bulbs, smoke detector batteries, air filters, small maintenance tools, Schedule E, Lines 7 and 15. These are small individually but add up over the year, and they're easy to forget without a system.
15. Eviction costs
Attorney fees, court filing costs, process server fees, fully deductible as legal and professional expenses. A contested eviction can run $3,000 to $10,000 or more. That's a significant deduction when you're going through it, and one you should absolutely be capturing.
Advanced deductions for growing portfolios
16. Cost segregation studies
A cost segregation study breaks out components of your building, appliances, flooring, cabinetry, landscaping, parking, and reclassifies them into 5-, 7-, or 15-year depreciation schedules instead of 27.5 years. The result is front-loaded depreciation that can generate tens of thousands in additional deductions in the early years of ownership.
Studies typically run $5,000 to $15,000 and make the most sense on properties above $500,000 in value. The study fee itself is deductible.
17. Bonus depreciation
In 2026, bonus depreciation lets you deduct 40% of qualifying short-lived assets in the year they're placed in service, primarily assets identified through a cost segregation study. This percentage has been stepping down from 100% in 2022, so the window to get meaningful bonus depreciation is narrowing.
18. Section 199A (QBI) deduction
If your rental activity qualifies as a business under IRS safe harbor rules, you can deduct up to 20% of your net rental income under Section 199A. The requirements: separate books and records, at least 250 hours of rental services per year, and contemporaneous documentation. It's worth verifying with your CPA, this deduction can meaningfully reduce your effective tax rate on rental income.
19. Casualty and theft losses
Unreimbursed losses from a federally declared disaster, fire, or theft are deductible via Form 4684. The calculation is the decrease in fair market value minus any insurance proceeds you received. Hopefully you never need this one.
20. Pass-through losses
If your rental generates a net loss and your adjusted gross income is under $100,000, you can deduct up to $25,000 of that loss against other income, as long as you actively participate in the rental activity. The allowance phases out between $100,000 and $150,000 AGI and disappears entirely above that threshold.
What you cannot deduct
Honestly, just as important as knowing what's deductible is knowing what isn't. Common non-deductible items:
- Capital improvements, Must be depreciated over time, not expensed immediately
- Personal use expenses, Days you use the property personally don't generate deductible expenses
- Loan principal payments, Only interest is deductible; the principal portion isn't
- Land value, Land cannot be depreciated, full stop
- Lost rent, Uncollected rent isn't a deduction, you simply don't report it as income in the first place
- Fines and penalties, Code violation fines, late payment penalties to vendors, generally not deductible
How SealedFolio tracks every deduction automatically
Look, knowing what's deductible is the easy part. The hard part is tracking everything accurately across 12 months. A receipt you forget in February is a deduction you lose in April.
I built SealedFolio to solve exactly this. Every transaction gets categorized into IRS-aligned expense categories as you enter it. At tax time, you generate a complete Schedule E report with every deduction sorted by line item, no digging through folders, no trying to remember what that $340 charge was. Depreciation is calculated automatically from your property details. Mileage tracking is built in.
And everything stays on your device. No cloud uploads, no third-party servers, no one else looking at your financials.
Want to estimate your deductions now? Use our free Schedule E calculator to see how your deductions add up.