Owning a rental property comes with real headaches — leaky faucets, late-night maintenance calls, and tenant turnover — but it also comes with one of the most generous sets of tax deductions available to any small business owner. Here’s a complete breakdown of what landlords can write off in 2025.
Rental Income Is Reported on Schedule E
Unless you provide hotel-like services, rental property income and expenses are reported on Schedule E rather than Schedule C, which means rental profit generally isn’t subject to self-employment tax, even though it’s still fully taxable as income.
Mortgage Interest
Interest paid on the loan used to buy or improve your rental property is fully deductible, and for many landlords it’s the single largest deduction on the return.
Property Taxes
Property taxes on the rental are deductible in full as a rental expense, separate from the $10,000 SALT cap that applies to personal residence property taxes on Schedule A.
Depreciation
The IRS lets you deduct the cost of the building itself (not the land) over 27.5 years for residential rental property. This is a non-cash deduction, meaning you can claim it even though you aren’t writing an actual check for it each year.
Repairs vs. Improvements
Repairs that keep the property in working condition — fixing a leak, patching drywall, repainting — are deducted in full the year you pay for them. Improvements that add value or extend the property’s life, like a new roof or a kitchen remodel, must be depreciated over several years instead.
Insurance Premiums
Landlord insurance, umbrella liability policies, and flood insurance on the rental property are all fully deductible business expenses.
Property Management and Professional Fees
Fees paid to a property manager, leasing agent, accountant, or attorney for rental-related work are deductible, along with software subscriptions used to manage bookings, rent collection, or bookkeeping.
Utilities and Maintenance
Any utilities you pay on behalf of tenants, along with landscaping, pest control, snow removal, and routine maintenance contracts, are deductible rental expenses.
Travel and Mileage
Driving to the property to handle repairs, meet contractors, or show units to prospective tenants is deductible, either through the standard mileage rate or actual vehicle expenses.
The Qualified Business Income Deduction
Many landlords can also deduct up to 20% of their net rental income under the QBI deduction, though the rules depend on how actively you’re involved in managing the property.
Passive Activity Loss Limits
Rental losses are generally considered passive and can only offset passive income, though an exception allows active participants earning under certain income thresholds to deduct up to $25,000 of rental losses against other income.
Frequently Asked Questions
Can I deduct the cost of the property itself right away? No — the purchase price of the building is recovered gradually through depreciation over 27.5 years rather than deducted all at once.
What if I manage the property myself? You can still deduct your actual expenses, but you cannot pay yourself a salary and deduct it, since you aren’t an employee of your own rental activity.
Do short-term vacancies affect my deductions? No — you can still deduct ordinary expenses during vacancy periods as long as the property is being actively held out for rent.
A tax professional can help you navigate depreciation schedules, passive loss limits, and the QBI deduction, since small differences in how a property is used can significantly change what you’re able to claim.