What Tax Deductions Can I Claim on a Rental Property in 2025?

Introduction

Owning a rental property can be a fantastic way to generate income, but it also comes with its fair share of responsibilities—especially when it comes to taxes. Thankfully, the IRS allows rental property owners to deduct many of their expenses, which can significantly reduce your taxable income. In this article, we’ll break down the key tax deductions you can claim on your rental property in 2025 to help you keep more money in your pocket.

Mortgage Interest

If you took out a loan to buy or improve your rental property, the interest you pay on that loan is deductible. This doesn’t include the principal portion of your payments but can make a big difference if you’re carrying a significant mortgage. Remember to review your annual mortgage statement for the exact interest amount paid and keep it handy for tax season.

Property Taxes

Property taxes are another major deduction for landlords. These taxes are assessed by your local government and can vary widely depending on your property’s location. Make sure you retain all records of payments made so you can claim the full deduction without hassle.

Depreciation

Depreciation is a tax break that recognizes the gradual wear and tear on your property over time. The IRS allows you to deduct the cost of the building—not the land—over 27.5 years for residential rental properties. For example, if the value of your property (excluding the land) is $275,000, you can deduct $10,000 annually for depreciation. This deduction can significantly offset your rental income, so don’t overlook it.

Repairs and Maintenance

Repair and maintenance costs are fully deductible in the year they occur. This includes fixing a leaky faucet, repainting walls, or repairing a broken window. However, it’s important to distinguish between repairs and improvements. Repairs restore the property to its original condition and are deductible right away, while improvements—like adding a new deck or remodeling a kitchen—must be depreciated over time.

Operating Expenses

Running a rental property comes with plenty of day-to-day costs, and many of these are tax-deductible. Common operating expenses include:

• Advertising for tenants
• Property management fees
• Utilities paid by the landlord
• Insurance premiums
• Homeowners association (HOA) fees

Keeping detailed records of these expenses ensures you can claim every eligible deduction.

Travel Expenses

Do you travel to check on your rental property, meet tenants, or oversee repairs? If so, you may be able to deduct travel expenses. This can include mileage if you drive to the property or airfare and lodging if your property is out of town. To stay on the IRS’s good side, keep detailed records of each trip, including dates, purposes, and costs.

Professional Services

Hiring professionals for your rental business can also lead to deductions. This includes:

• Legal fees for drafting leases
• Accounting services for tax preparation
• Consulting fees for property investments

These costs are fully deductible in the year you pay them, so don’t hesitate to enlist professional help when needed.

Casualty and Theft Losses

If your property is damaged due to a natural disaster or stolen property, you might qualify for a casualty or theft loss deduction. The IRS typically allows you to claim losses not covered by insurance if they exceed 10% of your adjusted gross income (AGI). In 2025, check for any updates regarding federally declared disaster areas, as special rules often apply.

Home Office Deduction

If you use part of your home exclusively for managing your rental property, you might qualify for a home office deduction. This space could be used for tasks like bookkeeping, communicating with tenants, or coordinating repairs. The deduction can be calculated based on the square footage of your office or by using the simplified method of $5 per square foot (up to 300 square feet).

Loan Interest Beyond Mortgages

Did you take out a personal loan to fund property upgrades or pay for major repairs? If so, the interest on these loans may be deductible as well. Just be sure to keep clear records to demonstrate that the loan was used for your rental property.

Appliances and Furniture Depreciation

If you provide appliances, furniture, or equipment as part of your rental property, these items can be depreciated over time. For example, a new refrigerator, washer, or dryer is typically depreciated over five years. These deductions add up and can offset your taxable income further.

Education and Resources

Are you investing in your knowledge as a landlord? Expenses like books, courses, or subscriptions related to rental property management are tax-deductible. For instance, if you purchase a course about maximizing rental income or subscribe to a real estate trade publication, you can deduct those costs as part of your business expenses.

Recordkeeping Is Key

Claiming deductions is only possible if you have proper documentation. Save every receipt, invoice, and bank statement related to your rental property expenses. Using accounting software or hiring a bookkeeper can simplify the process and ensure nothing slips through the cracks.

Consult a Tax Professional

While these deductions can save you a lot of money, the rules surrounding them can be complex. A tax professional or CPA who specializes in rental properties can help you navigate these deductions and ensure you’re taking advantage of every opportunity to lower your tax bill.

Final Thoughts

Understanding the tax deductions available for your rental property in 2025 can help you maximize your profits and minimize your tax burden. From mortgage interest and property taxes to depreciation and operating costs, these deductions make owning a rental property even more rewarding.

Stay organized, keep meticulous records, and don’t hesitate to seek professional advice. With the right approach, you can make the most of your rental property investment while staying compliant with IRS regulations.