Rental property is one of the most deduction-rich activities in the tax code — and also one where landlords most often leave money on the table. The reason is usually bookkeeping, not the rules: deductions you don't track, you don't claim. This guide covers the 15 deductions every landlord should be tracking, the repair-versus-improvement distinction that quietly costs people thousands, and the mileage deduction almost everyone forgets.
15 Tax Deductions Every Landlord Should Track
All of these land on Schedule E (US) or T776 (Canada), tracked per property:
- Mortgage interest — the financing cost on the loan (not the principal portion).
- Property taxes — annual municipal and county property tax.
- Insurance — landlord/hazard and liability premiums.
- Repairs and maintenance — fully deductible the year paid (see the next section).
- Depreciation — the building's basis recovered over 27.5 years.
- Travel and mileage — trips to manage the property, at the IRS standard rate.
- Home office — if you manage your properties from a dedicated home workspace.
- Advertising — listing fees, photos, signage to find tenants.
- Legal and professional fees — attorney, accountant, eviction filings.
- Property management fees — paid to a manager or agency.
- Utilities — any utility you pay rather than the tenant.
- Pest control — recurring extermination and prevention.
- Landscaping and grounds — lawn care, snow removal, tree work.
- HOA dues — homeowner-association fees on the rental.
- Casualty losses — uninsured damage from storms, fire, or theft (subject to IRS rules).
For the per-property worksheet that totals all of these automatically, see the rental property expense tracker, and the Schedule E / T776 guide for DIY landlords for how the form itself works.
Repairs vs Improvements — The Distinction That Costs Landlords Money
This is the single most expensive mistake landlords make, and it goes both ways. The rule:
- A repair keeps the property in its existing condition — fixing a leak, patching drywall, repainting, replacing a broken window. It's fully deductible the year you pay for it.
- An improvement adds value, extends the property's life, or adapts it to a new use — a new roof, a kitchen remodel, a room addition, new HVAC. It must be capitalized and depreciated over 27.5 years.
Why it matters: a $6,000 roof repair classified correctly as a repair is a $6,000 deduction this year. Mislabel it an improvement and you deduct roughly $218/year for 27.5 years instead. Conversely, deducting a true improvement all at once invites an IRS adjustment. Track the nature of each expense when it happens — not in April, when you can't remember whether the plumber fixed a leak or re-piped the whole unit.
The Mileage Deduction Landlords Forget
Every trip you take to manage a rental is deductible: driving out for an inspection, meeting a contractor, showing a vacant unit, or picking up a rent cheque. At the IRS standard mileage rate, those trips add up faster than landlords expect — a few visits a month across a season is often hundreds of dollars in deductions that never get claimed because nobody logged the miles.
The requirement is a contemporaneous log: date, destination, miles, and business purpose. Use the mileage calculator to value the trips, or let ExpenseBot's mileage tracker record each one and apply the current rate automatically.
How to Track These Deductions Year-Round
The landlords who claim everything aren't more diligent in April — they capture as they go. A maintenance receipt in June, an insurance renewal in September, and a property-tax bill in November are each filed to the right property the moment they arrive, so the Schedule E worksheet is already built by tax time.
ExpenseBot does this by scanning your Gmail for vendor receipts overnight and tagging each to a property address. For the complete method — including the five tracking approaches ranked — see how to track rental property expenses, and start with the rental property tracker.
Frequently Asked Questions
What can landlords deduct on taxes?
On Schedule E, landlords can deduct mortgage interest, property taxes, insurance, repairs and maintenance, depreciation, property management fees, advertising, landlord-paid utilities, travel and mileage to the property, legal and professional fees, HOA dues, landscaping, and pest control. Each is tracked per property. Improvements that add value (a new roof, a remodel) aren't deducted immediately — they're depreciated over 27.5 years.
Can a landlord deduct a home office?
Yes, if you regularly and exclusively use a part of your home to manage your rental properties — handling tenants, bookkeeping, scheduling repairs. The home-office deduction is available to landlords who actively manage, using either the simplified method ($5/sq ft up to 300 sq ft) or actual expenses. It is not available if a property manager handles everything and you're a passive owner.
What's the difference between a repair and an improvement?
A repair keeps the property in working order (fixing a leak, patching drywall) and is fully deductible the year you pay for it. An improvement adds value or extends the property's life (a new roof, a kitchen remodel, an addition) and must be capitalized and depreciated over 27.5 years. Misclassifying a repair as an improvement defers a deduction you could take now.
Can I deduct mileage to my rental property?
Yes. Driving to your rental for inspections, repairs, showings, or rent collection is deductible at the IRS standard mileage rate, or you can use actual vehicle costs. Ordinary commuting doesn't count, but a trip from home to manage the property does. Keep a log of date, destination, miles, and purpose.
How many years can a landlord depreciate a rental property?
Residential rental property is depreciated over 27.5 years under the IRS Modified Accelerated Cost Recovery System (MACRS). You depreciate the building's value (not the land) — divide the building basis by 27.5 to get the annual deduction. Improvements you make are depreciated on their own 27.5-year (or shorter, for certain components) schedules from when they're placed in service.
Do I report rental income and expenses per property?
Yes. Schedule E has a separate column for each property, so income and expenses must be tracked per property — not lumped into a single 'rental' bucket. This is why tagging each receipt to a property address as it comes in saves hours at tax time versus reconstructing it later.