List of Most Common Rental Expenses You Can Deduct on Your Return and Expenses You Should Capitalize

Generally, you can deduct the rental expenses from your rental income in the year you paid them. But you have to capitalize certain expenses and take depreciation (yearly tax deduction) over their useful life based on IRS requirement. Listed below are the common expenses that can be deducted or should be capitalized.

 

Common rental expenses can be deducted:

1. Advertising expenses for your rental property.
2. Auto and travel expenses that you incurred to collect rental income or to manage, conserve, or maintain the rental property.
3. Cleaning, repair and maintenance.
4. Commissions.
5. Depreciation.
6. Insurance.
7. Mortgage interest.
8. Legal and other professional fees, such as tax return preparation fees.
9. Management fees.
10. Property taxes or other taxes paid for your rental property.
11. Utilities.

Common rental expenses should be capitalized:

1. Residential rental property (buildings or structures) you owned exclude land.
2. Additions and improvements, such as deck, new roof, garage etc.
3. Computers and office equipment.
4. Automobiles and light trucks.
5. Appliances.
6. Carpets.
7. Furniture used in rental property.
8. Roads, shrubbery and fences.