Rental Property Tax Deductions: 2026 Guide + Checklist

Rental property tax deductions can reduce the amount of rental income subject to federal income tax, but not every property-related cost is treated the same way.

Some expenses can generally be deducted in the year you pay or incur them. Others must be capitalized and recovered through depreciation. Some costs, such as mortgage principal and personal expenses, are not deductible rental expenses at all.

This guide explains the main federal tax deductions available to U.S. residential landlords in 2026 and includes a practical checklist to help you keep the records you need throughout the year.

Rental Property Tax Deductions Checklist

Use this checklist throughout the year rather than trying to reconstruct your expenses at tax time

The important question is not simply whether you spent money on the property. It is how the tax rules classify that cost.

Deduct Now, Depreciate, or Not Deductible?

For repairs and improvements, the IRS applies the tangible-property rules rather than a simple dollar threshold.

1. Mortgage Interest and Financing Costs

Mortgage interest is often one of a landlord's largest deductible expenses.

Interest on debt used for the rental activity may generally be deductible, including qualifying interest on:

• A mortgage used to acquire the rental property.
• Loans used for rental-property improvements or operations.
• Credit cards used for deductible rental expenses.

The principal portion of a mortgage payment is not deductible because it reduces the outstanding loan balance.

Keep your Form 1098 where issued, mortgage statements and records showing how borrowed funds were used.

Loan fees, points and other financing or closing costs can have separate amortization or capitalization rules, so don't assume every cost shown on a closing statement is immediately deductible.

2. Repairs and Maintenance

Repairs and maintenance are generally deductible when they keep the property in its ordinary efficient operating condition without materially improving it.

Examples can include:

• Fixing a leaking faucet.
• Repairing an existing HVAC system.
• Repainting between tenancies.
• Replacing a broken window.
• Routine pest control.
• Gutter cleaning.
• Lawn care.
• Snow removal.

Keep detailed invoices describing the work performed. This can help establish whether a cost was a repair or an improvement.

A cost may instead need to be capitalized if it betters, restores or adapts the property to a new or different use.

For example, replacing several damaged roof shingles may be a repair, while replacing the entire roof would generally be treated as an improvement.

See our guide to capital improvements vs repairs.

3. Capital Improvements

Track improvements separately from routine repairs.

Common examples include:

• A full roof replacement.
• A new HVAC system.
• Major kitchen or bathroom renovations.
• Structural additions.
• Major flooring replacements.
• Other substantial upgrades.

These costs normally need to be added to the property's basis and recovered through depreciation rather than claimed as an immediate repair expense.

Keep the invoice, date placed in service and property the improvement relates to.

4. Property Taxes

State and local real estate taxes imposed on a rental property are generally deductible rental expenses.

However, assessments for certain local improvements that increase the property's value may need to be added to its basis instead.

Keep annual property-tax bills, payment records and any special assessment notices.

5. Insurance

Premiums for insurance related to the rental activity are generally deductible.

This can include:

• Landlord insurance.
• Fire, theft and liability coverage.
• Flood insurance.
• Other rental-specific policies.
• Employee-related insurance where applicable.

If a premium covers more than one tax year, the timing of the deduction can depend on the circumstances and accounting method used.

6. Property Management Fees and Landlord Software

Fees paid to property managers are generally deductible when they relate to operating the rental.

The same principle can apply to software and services used for your rental activity, including:

• Rental accounting software.
• Rent-collection services.
• Tenant-management tools.
• Digital document storage.
• Bookkeeping subscriptions.
• E-signature and lease-management tools.

For subscriptions with both personal and rental use, only claim the properly allocable rental-business portion.

7. Utilities

Utilities you pay for the rental are generally deductible.

These can include:

• Electricity.
• Gas.
• Water.
• Trash.
• Internet supplied under the lease.

If a tenant reimburses you for an expense that is your responsibility, the reimbursement may also need to be recorded as rental income.

Track both the original expense and the reimbursement.

8. Advertising, Leasing and Tenant-Screening Costs

Costs incurred to find tenants and rent the property are generally deductible operating expenses.

Examples include:

• Rental listing fees.
• Photography.
• For-rent signs.
• Online advertising.
• Tenant-screening reports paid by the landlord.
• Marketing costs.
• Certain leasing or placement fees.

Keep invoices and associate each cost with the relevant property.

9. Legal, Accounting and Professional Fees

Professional fees are generally deductible when they relate to the ordinary management or operation of your rental activity.

Examples can include:

• Rental-related tax preparation.
• Bookkeeping.
• Legal advice relating to tenants or leases.
• Property-management consulting.
• Other professional services connected with operating the rental.

Costs connected with acquiring property, defending title or carrying out capital improvements may instead need to be capitalized.

10. Employees and Independent Contractors

Amounts paid to cleaners, handymen, landscapers, bookkeepers, property managers and other workers can generally be deductible when the work relates to the rental activity.

You should also consider worker classification, payroll rules and applicable information-reporting requirements.

2026 Form 1099-NEC Threshold

For payments made after 2025, the federal information-reporting threshold for certain payments, including qualifying nonemployee compensation reported on Form 1099-NEC, increased from $600 to $2,000.

The threshold alone does not determine whether you have a filing obligation. The result can depend on who was paid, how they were paid and the type of payment involved.

See the current IRS instructions for Forms 1099-MISC and 1099-NEC.

11. Travel and Mileage

Travel undertaken for legitimate rental-business purposes may be deductible.

Examples can include trips to:

• Inspect or manage a property.
• Meet a contractor.
• Purchase repair supplies.
• Travel between rental properties.

Keep a mileage log recording the:

• Date.
• Starting point and destination.
• Rental-business purpose.
• Miles driven.

2026 Standard Mileage Rates

The business mileage rate changed during 2026:

• January 1–June 30, 2026: 72.5 cents per business mile
• July 1–December 31, 2026: 76 cents per business mile

If you use the standard mileage method, separate mileage between these two periods.

Travel between your home and a rental property can be more complicated because commuting and principal-place-of-business rules may apply.

See the IRS standard mileage rates.

12. HOA and Condo Dues

Ordinary HOA or condo dues associated with operating a rental property are generally deductible.

Special assessments used to fund capital improvements may instead need to be added to basis and depreciated.

Keep normal dues and special assessments categorized separately.

13. Office, Phone and Administrative Expenses

Ordinary administrative expenses related to managing your rental activity can generally be deductible.

These can include:

• Office supplies.
• Postage.
• Lease-document services.
• Cloud storage.
• Business software.
• Rental-business phone use.
• Rental-business internet use.
• Relevant professional subscriptions.

For mixed personal and rental use, only claim the properly allocable rental portion.

14. Home Office Expenses

A landlord may qualify for a home-office deduction when the rental activity rises to the level of a trade or business and the home-office requirements are met.

Among other requirements, the space generally needs to be used regularly and exclusively for the qualifying business activity.

Keep records of:

• The size of the office.
• Evidence showing the dedicated space.
• Eligible home expenses if using the actual method.
• How the space is used for the rental activity.

Owning or managing a rental property does not automatically create eligibility for the home-office deduction.

15. Furniture, Appliances and Equipment

Keep records for assets such as:

• Appliances.
• Furniture.
• Equipment.
• Other tangible property used in the rental.

Record the:

• Purchase date.
• Cost.
• Property assigned to.
• Date placed in service.
• Business-use percentage where relevant.

Some assets will be depreciated over their applicable recovery period, while others may qualify for a safe harbor.

De Minimis Safe Harbor

For taxpayers without an applicable financial statement, the federal de minimis safe-harbor threshold is generally $2,500 per invoice or item when the requirements and annual election are satisfied.

For taxpayers with an applicable financial statement, a $5,000 threshold can apply.

This is not an automatic rule that every purchase below these amounts is immediately deductible.

16. Depreciation

Depreciation allows landlords to recover the cost of eligible property over time.

Under the general MACRS rules, residential rental buildings are generally depreciated over 27.5 years. Land itself is not depreciable.

Different recovery periods may apply to:

• Appliances.
• Furniture.
• Equipment.
• Land improvements.
• Capital improvements.

The property's tax basis also needs to be allocated between depreciable building value and nondepreciable land.

Keep an up-to-date depreciation schedule rather than relying solely on the property's original purchase price.

See our rental property depreciation guide.

What About the Qualified Business Income Deduction?

The Section 199A qualified business income deduction, or QBI deduction, is separate from ordinary Schedule E expense deductions.

The 20% QBI deduction remains available under the post-2025 rules for eligible taxpayers.

For 2026, eligible taxpayers with at least $1,000 of qualified business income from active qualified trades or businesses may also potentially qualify for a minimum $400 QBI deduction, subject to the statutory requirements.

Importantly:

• QBI generally applies to eligible noncorporate taxpayers.
• Income earned through a C corporation does not qualify.
• Rental real estate does not automatically qualify as a Section 199A trade or business.

Rental Real Estate Safe Harbor

Revenue Procedure 2019-38 provides a safe harbor under which a rental real estate enterprise can be treated as a trade or business for QBI purposes when its requirements are satisfied.

Those requirements include separate books and records and, generally, 250 or more hours of qualifying rental services for the relevant period, along with recordkeeping requirements.

A rental that doesn't meet the safe harbor may still potentially qualify if it otherwise rises to the level of a Section 162 trade or business.

How Much Rental Loss Can You Deduct?

Rental real estate is generally treated as a passive activity for federal tax purposes, which can restrict when rental losses can offset nonpassive income such as wages.

However, a special allowance exists for certain taxpayers who actively participate in rental real estate.

The $25,000 Special Allowance

Qualifying taxpayers may be able to deduct up to $25,000 of rental real estate loss against nonpassive income.

The allowance phases out according to modified adjusted gross income:

• MAGI of $100,000 or less: up to the full $25,000 allowance may be available.
• MAGI above $100,000: the allowance is reduced by 50 cents for every $1 above $100,000.
• MAGI of $150,000 or more: the allowance is generally fully phased out.

Unused passive losses can generally be suspended and carried forward subject to the applicable passive-activity and at-risk rules.

Keep prior-year tax returns and passive-loss schedules so these amounts are not lost.

See IRS Publication 925.

Real Estate Professional Status Is Different

The $25,000 active-participation allowance is separate from real estate professional status.

If a taxpayer qualifies as a real estate professional and materially participates in the relevant rental real estate activity, the activity may be treated as nonpassive.

Qualifying as a real estate professional by itself is not enough; material-participation rules also apply.

See our guide to real estate professional status.

What Happens to Depreciation When You Sell?

Depreciation reduces a property's adjusted tax basis.

When depreciated property is later sold at a gain, some of that gain may receive special recapture treatment.

It is misleading to assume all rental-property depreciation is simply recaptured as ordinary income.

For example:

• Section 1245 property, which can include certain shorter-life assets, can generate ordinary-income recapture to the extent of depreciation allowed or allowable, limited by the gain.
• Section 1250 real property, including a typical residential rental building, follows different rules. Straight-line depreciation can contribute to unrecaptured Section 1250 gain, which is subject to a maximum 25% federal rate rather than automatically being treated as ordinary income.

The exact result depends on the assets sold, depreciation history and structure of the transaction.

See IRS Publication 544.

Where Do Landlords Report Rental Property Deductions?

Individual landlords commonly report rental income and expenses on Schedule E (Form 1040), Part I.

Schedule E includes categories such as:

• Advertising.
• Auto and travel.
• Cleaning and maintenance.
• Commissions.
• Insurance.
• Legal and professional fees.
• Management fees.
• Mortgage interest.
• Repairs.
• Supplies.
• Taxes.
• Utilities.
• Depreciation.

The category shown on Schedule E does not override the underlying tax treatment. A capital improvement, for example, doesn't become an immediate repair deduction simply because it relates to property maintenance.

See our Schedule E categories guide.

What Rental Property Tax Records Should Landlords Keep?

Keep documentation supporting both your rental income and deductions, including:

• Rent received.
• Advance rent.
• Late fees and other rental income.
• Invoices and receipts.
• Bank and credit-card transactions.
• Mortgage interest.
• Property-tax statements.
• Insurance records.
• Contractor payments.
• Mileage logs.
• Capital improvement invoices.
• Asset purchase records.
• Depreciation schedules.
• Closing statements.
• Tenant reimbursements.
• Prior-year passive-loss schedules where relevant.

You should also retain records supporting the property's tax basis for as long as they are needed to establish basis, including when the property is eventually sold.

Year-End Rental Property Tax Checklist

Before preparing Schedule E or sending your records to your accountant, check that you have:

• Reconciled rental bank and credit-card transactions.
• Recorded all rental income.
• Recorded tenant reimbursements and other property income.
• Separated mortgage interest from principal.
• Reviewed uncategorized expenses.
• Separated repairs from capital improvements.
• Added newly purchased assets to your asset register.
• Split 2026 standard-mileage records between January–June and July–December.
• Reviewed contractor payments for potential Form 1099 reporting.
• Saved property-tax and insurance statements.
• Saved closing statements for acquisitions or refinances.
• Updated depreciation schedules.
• Carried forward prior-year passive losses where applicable.
• Saved receipts, invoices and supporting documents.

What Shouldn't Be Claimed as a Current Rental Expense?

Common items that shouldn't simply be entered as immediate rental deductions include:

• Mortgage principal.
• The value of your own labor.
• Personal expenses.
• Land.
• Capital improvements that must be depreciated.
• Acquisition costs that belong in the property's basis.
• Costs attributable to personal use of a mixed-use property.

When you're unsure how a cost should be treated, flag it rather than forcing it into a current expense category.

Tracking Rental Property Deductions With Landlord Studio

Landlord Studio helps landlords organize rental income and expenses throughout the year, connect bank accounts, store receipts and documents, track mileage and generate property-level financial reports.

Keeping transactions categorized as they happen makes the year-end checklist easier to complete and can reduce the chance of losing track of legitimate rental expenses at tax time.

Learn more about rental accounting with Landlord Studio.

Rental Property Tax Deduction FAQs

What expenses can landlords deduct?

Common deductible rental expenses include qualifying mortgage interest, property taxes, insurance, repairs, maintenance, property-management fees, utilities, advertising, professional fees, contractor costs, mileage and other ordinary and necessary costs of operating the rental.

Is mortgage principal tax deductible?

No. Mortgage principal is not a deductible rental expense because it reduces the outstanding loan balance. Qualifying mortgage interest is treated separately and may be deductible.

Can I deduct a new roof?

A full roof replacement is generally treated as a capital improvement rather than an immediate repair expense. The cost would normally be capitalized and recovered through depreciation.

Can landlords deduct mileage in 2026?

Qualifying rental-business mileage may be deductible. The business mileage rate is 72.5 cents per mile for January through June 2026 and 76 cents per mile for July through December 2026.

Are property-management fees deductible?

Generally, yes, when they are ordinary and necessary expenses of operating the rental activity.

Are HOA fees deductible?

Ordinary HOA or condo dues attributable to the rental are generally deductible operating expenses. Capital assessments may need to be capitalized instead.

Is the QBI deduction a rental property expense?

No. The Section 199A QBI deduction is separate from the ordinary rental expenses reported on Schedule E.

Can every landlord deduct up to $25,000 of rental losses?

No. The special allowance applies to qualifying taxpayers who actively participate and meet the applicable ownership and income requirements.

This article is for general informational and educational purposes only and does not constitute tax, legal or financial advice. Federal, state and local rules can change and individual circumstances vary. Consult a qualified tax professional about your specific situation.