The Most Common Rental Expenses

Landlords! Remember these common rental expenses when preparing your 2013 tax return.

  • Advertising – advertising expenses relating to offering the unit for rent.
  • Cleaning and Maintenance – Whether you are cleaning an apartment in between tenants, cleaning out a sewer line to avoid future plumbing problems or power washing the building’s exterior, it is all tax deductible. Make sure to keep all receipts for materials, rental equipment and labor costs.
  • Commissions – Commissions, bonuses, fees, and other amounts you pay to get a lease on the property.
  • Depreciation – You can begin to depreciate rental property when it is ready and available for rent.
  • Insurance – If you pay an insurance premium for more than one year in advance, for each year of coverage you can deduct the part of the premium payment that will apply to that year. You cannot deduct the total premium in the year you pay it.
  • Interest (other) – You can deduct mortgage interest you pay on your rental property. When you refinance a rental property for more than the previous outstanding balance, the portion of the interest allocatable to loan proceeds not related to rental use generally cannot be deducted as a rental expense.
  • Legal and other professional fees – You can deduct, as a rental expense, legal and other professional expenses such as tax return preparation fees you paid to prepare Schedule E, Part I.
  • Local transportation expenses – You may be able to deduct your ordinary and necessary local transportation expenses if you incur them to collect rental income or to manage, conserve, or maintain your rental property.
  • Management fees – Management fees that you pay to a property management company. The property management company should provide you with end of the year tax papers.
  • Mortgage interest paid to banks, etc. – If you paid $600 or more of mortgage interest on your rental property to any one person, you should receive a Form 1098 or similar statement showing the interest you paid for the year.
  • Points – The term “points” is often used to describe some of the charges paid, or treated as paid, by a borrower to take out a loan or a mortgage. These charges are also called loan origination fees, maximum loan charges, or premium charges.
  • Repairs
  • Taxes – In most cases, you cannot deduct charges for local benefits that increase the value of your property, such as charges for putting in streets, sidewalks, or water and sewer systems. However, you can deduct local benefit taxes that are for maintaining, repairing, or paying interest charges for the benefits.
  • Utilities – Generally, an expense for repairing or maintaining your rental property may be deducted if you are not required to capitalize the expense.

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